Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Country A can produce more cars than Country B, so it should only produce cars.
B
Country A produces wine at a lower opportunity cost than cars, while Country B does the opposite.
C
Both countries produce the same amount of goods with identical resources.
D
Country B has better technology than Country A, allowing it to produce all goods more efficiently.
Understanding the Answer
Let's break down why this is correct
Answer
Comparative advantage is the idea that countries or people should focus on what they do best compared to others, even if they are not the best at everything. For example, imagine one person can make 10 shirts or 5 hats in a day, while another person can make 8 shirts or 4 hats in the same time. The first person has a lower opportunity cost for making shirts, so they should specialize in shirts, while the second person should focus on hats. By doing this, both can trade and end up with more shirts and hats than if they tried to make both themselves. This shows how working together based on strengths can lead to better outcomes for everyone involved.
Detailed Explanation
This option shows that each country can produce something at a lower cost than the other. Other options are incorrect because This option suggests that one country should only make cars; This option says both countries make the same amount of goods.
Key Concepts
Comparative Advantage
Opportunity Cost
Absolute Advantage
Topic
Comparative and Absolute Advantage
Difficulty
easy level question
Cognitive Level
understand
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