📚 Learning Guide
Comparative and Absolute Advantage
easy

Which of the following statements best defines comparative advantage?

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Choose the Best Answer

A

A country can produce more of a good than another country using the same resources.

B

A country can produce a good at a lower opportunity cost than another country.

C

A country has more resources than another country.

D

A country can sell goods at a lower price than another country.

Understanding the Answer

Let's break down why this is correct

Answer

Comparative advantage is the ability of a person, business, or country to produce a good or service at a lower opportunity cost than others. This means that they can make that product more efficiently compared to other options available to them. For example, if Country A can produce cars more efficiently than wheat, while Country B can produce wheat more efficiently than cars, each country should focus on what they do best. By doing this, they can trade with each other and both end up with more cars and wheat than if they tried to produce both on their own. This concept shows how specialization and trade can benefit everyone involved.

Detailed Explanation

Comparative advantage means a country can make something with less sacrifice than another country. Other options are incorrect because This option confuses production quantity with efficiency; Having more resources doesn't guarantee better production.

Key Concepts

comparative advantage
Topic

Comparative and Absolute Advantage

Difficulty

easy level question

Cognitive Level

understand

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