📚 Learning Guide
Comparative Advantage Analysis
easy

A country can benefit from trade even if it does not have an absolute advantage in producing any goods compared to another country.

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

True

B

False

Understanding the Answer

Let's break down why this is correct

Answer

A country can still benefit from trade even if it doesn't have an absolute advantage, which means it is not the best at producing any goods compared to another country. This is because of something called comparative advantage, which occurs when a country can produce a good at a lower opportunity cost than another country. For example, suppose Country A is really good at making both cars and computers, but it is much better at making cars. If Country B is less efficient at both but is relatively better at making computers, then Country A should focus on making cars, while Country B focuses on computers. By doing this, both countries can trade and end up with more goods than if they tried to produce everything on their own, thus benefiting from their different strengths.

Detailed Explanation

Yes, a country can still gain from trade. Other options are incorrect because Some might think that if a country isn't the best at anything, it can't trade.

Key Concepts

Comparative Advantage
International Trade
Opportunity Cost
Topic

Comparative Advantage Analysis

Difficulty

easy level question

Cognitive Level

understand

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