The ability of one country that has an absolute advantage in the production of two or more goods (or services)to produce one of them relatively more efficiently than the other is called a(n)_____.

Question

Quizplus · Accepted Answer

The ability of a country to produce a good or service at a lower opportunity cost than another country is called comparative advantage. This means that even if a country has an absolute advantage in the production of both goods or services, it may still specialize in the production of the good or service for which it has a comparative advantage. Therefore, option B is the correct answer. Option A refers to the cost of producing one good or service in terms of the opportunity cost of producing another, while options C and D refer to factors of production and their prices, respectively. Option E is a result of a country's specialization in producing the good or service for which it has a comparative advantage.

The Ability of One Country That Has an Absolute Advantage