Chapter 18, Problem 8AA

To determine

To explain: A country can estimate about comparative advantage in production.

Explanation of Solution

Understanding that a country has a comparative advantage in the production of certain goods means the commodity or the goods which have a comparative advantage are produced with less opportunity costs than other trading partners or countries.

A country can have a comparative advantage only in few goods they produce & not all goods as they can be specialized in a few goods only depending upon the availability of inputs and its costs. Moreover, a country can have an absolute advantage in all the goods & services they produce.