When the principle of comparative advantage determines trade, then a country will
A) specialize only in that good with the highest opportunity cost.
B) specialize only in goods with the lowest opportunity costs.
C) specialize only in that good where output is less per worker hour than another country.
D) specialize only in that good where production costs are more than average total costs.

Question

Quizplus · Accepted Answer

When the principle of comparative advantage is applied, a country will specialize in producing and exporting goods in which it has the lowest opportunity cost. This means that the country can produce those goods at a lower cost compared to other countries, and as a result, it will have a comparative advantage in producing those goods. By specializing in those goods, the country can then trade with other countries and benefit from gains in trade.

When the Principle of Comparative Advantage Determines Trade, Then a Country