Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A country can benefit from trade by specializing in goods it produces at a lower opportunity cost.
B
Comparative advantage means a country must produce all goods more efficiently than others.
C
Countries should import goods that they produce at a higher opportunity cost.
D
Specialization in production leads to increased overall efficiency in resource allocation.
Understanding the Answer
Let's break down why this is correct
Answer
Comparative advantage is the idea that countries or individuals can benefit from specializing in producing goods or services that they can create more efficiently than others. This means that even if one person is better at everything, they should focus on what they do best compared to others. For example, if a farmer can grow wheat and corn, but is much better at growing wheat, they should focus on that while trading for corn from someone who grows it more efficiently. By doing this, both can end up with more of both products than if they tried to grow everything themselves. Therefore, statements that highlight specialization and the benefits of trade based on efficiency are true reflections of comparative advantage.
Detailed Explanation
Comparative advantage means focusing on what you do best compared to others, not just being better at everything. Other options are incorrect because This suggests that a country should only focus on low-cost goods; This idea is wrong because it implies a country must be the best at everything.
Key Concepts
Comparative Advantage
Opportunity Cost
Resource Allocation
Topic
Comparative Advantage Analysis
Difficulty
easy level question
Cognitive Level
understand
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