When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good,it is called
A) an absolute advantage.
B) a comparative advantage.
C) specialization.
D) production possibilities.
E) a trade off.

Question

Quizplus · Accepted Answer

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good, it means that the former has a comparative advantage in producing that good. This is because they have to give up fewer resources to produce the same amount of the good compared to the latter. Therefore, it is more efficient for the former to specialize in producing the good that they have a comparative advantage in and trade with the latter who has a comparative advantage in producing a different good. This will lead to a mutually beneficial outcome where both parties can consume more of both goods than they would be able to produce on their own.

When One Person's Opportunity Cost of Producing a Good Is