According to the principal of comparative advantage a country A. will import goods it can produce at the lowest relative cost. B. that produces goods at the lowest absolute cost will export those goods. C. will export goods it can produce at the lowest relative cost. D. will only import those goods that it cannot produce for itself.

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### Comparative Advantage in International Trade

**Question:**
According to the principle of comparative advantage, a country:

**Options:**
- A. will import goods it can produce at the lowest relative cost.
- B. that produces goods at the lowest absolute cost will export those goods.
- C. will export goods it can produce at the lowest relative cost.
- D. will only import those goods that it cannot produce for itself.

**Explanation:**

The principle of comparative advantage suggests that countries will benefit from trade by exporting goods they can produce at the lowest opportunity cost and importing goods that other countries can produce more efficiently. This principle emphasizes not the absolute cost of production (output per unit), but rather the relative efficiency (opportunity cost) with which a country can produce different goods.

For further understanding, consider the following comparisons:

- Absolute Advantage: A country has an absolute advantage if it can produce a good at a lower cost (in terms of resources used) than another country.
- Comparative Advantage: A country has a comparative advantage if it can produce a good at a lower opportunity cost compared to other goods it produces, relative to another country.

**Graphical Representation:**
In this multiple-choice format, there is no graphical representation provided. However, in a more detailed explanation, graphs illustrating production possibility frontiers (PPFs) and opportunity cost lines could further elucidate the concept of comparative advantage.

Understanding these concepts can help in grasping trade patterns and policies adopted by different nations under the framework of international economics.
Transcribed Image Text:### Comparative Advantage in International Trade **Question:** According to the principle of comparative advantage, a country: **Options:** - A. will import goods it can produce at the lowest relative cost. - B. that produces goods at the lowest absolute cost will export those goods. - C. will export goods it can produce at the lowest relative cost. - D. will only import those goods that it cannot produce for itself. **Explanation:** The principle of comparative advantage suggests that countries will benefit from trade by exporting goods they can produce at the lowest opportunity cost and importing goods that other countries can produce more efficiently. This principle emphasizes not the absolute cost of production (output per unit), but rather the relative efficiency (opportunity cost) with which a country can produce different goods. For further understanding, consider the following comparisons: - Absolute Advantage: A country has an absolute advantage if it can produce a good at a lower cost (in terms of resources used) than another country. - Comparative Advantage: A country has a comparative advantage if it can produce a good at a lower opportunity cost compared to other goods it produces, relative to another country. **Graphical Representation:** In this multiple-choice format, there is no graphical representation provided. However, in a more detailed explanation, graphs illustrating production possibility frontiers (PPFs) and opportunity cost lines could further elucidate the concept of comparative advantage. Understanding these concepts can help in grasping trade patterns and policies adopted by different nations under the framework of international economics.
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