Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
absolute cost
B
opportunity cost
C
production capability
D
resource utilization
Understanding the Answer
Let's break down why this is correct
Answer
In international trade, a country that can produce a good at a lower opportunity cost compared to another country has a comparative advantage. This means that the country gives up less of other goods when it produces that specific good. For example, if Country A can produce either 10 apples or 5 oranges, and Country B can produce either 6 apples or 3 oranges, Country A has a lower opportunity cost for apples because it gives up fewer oranges when it produces them. By focusing on what they do best, both countries can trade and benefit from each other's strengths, leading to more efficient production and consumption. This idea helps explain why countries specialize in certain products and trade with one another.
Detailed Explanation
Comparative advantage means producing something at a lower opportunity cost. Other options are incorrect because Some might think absolute cost is the key; People might confuse production capability with comparative advantage.
Key Concepts
Comparative Advantage
Opportunity Cost
Absolute Advantage
Topic
Comparative and Absolute Advantage
Difficulty
easy level question
Cognitive Level
understand
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