Question:
A country has comparative advantage in producing a good if
(1) it has the lowest opportunity cost for producing that good.
(2) it produces more of that good than any other country.
(3) it can be sold at a higher price.
(4) it produces the good with the highest profit margin.
(5) a country can produce a good using fewer resources than another country.
Correct Answer:
(1)
Answer Explanation:
The economic principle of comparative advantage, formulated by David Ricardo, states that a country should specialize in producing and exporting the goods for which it has the lowest relative internal opportunity cost compared to its trading partners.
Topic: International Trade Year: 2024
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