An economy is said to have a comparative advantage in the production of a good if it can produce that good:
A)with more resources than another economy.
B)at a higher opportunity cost than another economy.
C)outside its production possibility frontier.
D)at a lower opportunity cost than another economy.

Question

Quizplus · Accepted Answer

A country has a comparative advantage in producing a good if it can produce that good with a lower opportunity cost than another country. Opportunity cost is the cost of giving up the production of one good in order to produce another good. So, a lower opportunity cost means that a country gives up less production of another good in order to produce the good in question. This allows the country to produce more of both goods in total and thereby gain a comparative advantage in the production of that good.

An Economy Is Said to Have a Comparative Advantage in the Production