If a nation has an absolute advantage in producing a good,then it
A) will have a comparative advantage in producing that good.
B) will have no need to trade with other nations.
C) will always specialize in that good.
D) might or might not have a comparative advantage in producing that good.
E) will not have a comparative advantage in producing that good.

Question

Quizplus · Accepted Answer

Having an absolute advantage simply means that a country is able to produce a good more efficiently than another country. However, comparative advantage takes into account the opportunity cost of producing that good. Therefore, a country may still specialize in producing the good in which it has an absolute advantage, but it may not necessarily have a comparative advantage in producing it. It would depend on the opportunity cost of producing other goods that it can produce relatively more efficiently than other countries.

If a Nation Has an Absolute Advantage in Producing a Good,then