Answered: What is "comparative advantage"? A)…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What is "comparative advantage"? A) The ability of a country to produce goods at a lower opportunity cost than others. B) The ability of a country to produce more of a good than others with the same amount of resources. C) A countrys capability to produce goods at a higher price than others. D) The ability of a company to have higher stock prices than others. Please provide steps by step answer with proper explanation with final answer..

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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