Asked by Bianca LaForteza on Jul 03, 2024
Verified
A nation has a comparative advantage over a trading partner in the production of good A if it
A) produces good A at a lower opportunity cost per unit than its trading partner.
B) can produce good A with the same resources as its trading partner but in less time.
C) can match its trading partner's output of good A and have resources left over.
D) has an absolute advantage over its trading partner.
E) produces good A with fewer material inputs than its trading partner.
Opportunity Cost
The cost of forgoing the next best alternative when making a decision or choice.
Absolute Advantage
The ability of an individual, company, or country to produce a good or service at a lower cost per unit than other competitors with the same quality.
- Gain an understanding of the concepts of absolute and comparative advantage and their implementation in international trading.
- Differentiate between the concepts of absolute and comparative advantages by employing real-world examples.
Verified Answer
JR
Jordan RichardsonJul 07, 2024
Final Answer :
A
Explanation :
Comparative advantage is determined by the opportunity cost of producing a good. If a nation can produce good A at a lower opportunity cost per unit than its trading partner, then it has a comparative advantage in the production of that good.
Learning Objectives
- Gain an understanding of the concepts of absolute and comparative advantage and their implementation in international trading.
- Differentiate between the concepts of absolute and comparative advantages by employing real-world examples.