Which of the following holds true if a country is said to have a comparative advantage in the production of wheat?
A)The country can produce more wheat than any other nation.
B)The opportunity cost of producing wheat is lowest in the country.
C)The price of wheat is lowest in that country.
D)Domestic wheat is of the best quality in the world.
E)The country can produce only wheat.

Question

Quizplus · Accepted Answer

A country has a comparative advantage in the production of a good if it has a lower opportunity cost of producing that good. This means that the country gives up less of other goods to produce a unit of that good compared to other countries. In the case of wheat, if a country has a lower opportunity cost of producing wheat, it means that it can produce more wheat with fewer resources, or it can produce the same amount of wheat as another country but at a lower cost. Therefore, option B is the correct answer. Option A is incorrect because comparative advantage does not necessarily mean the country can produce more of a good than any other country. Option C is incorrect because the price of a good is determined by the interaction of demand and supply, not necessarily by comparative advantage. Option D is incorrect because having a comparative advantage does not necessarily mean the domestic wheat is of the best quality. Option E is incorrect because having a comparative advantage in one good does not mean the country can produce only that good.

Which of the Following Holds True If a Country Is