Which of the following is not correct?
A)The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.
B)The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X.
C)The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good.
D)The gains from specialization and trade are based not on comparative advantage but on absolute advantage.

Question

Quizplus · Accepted Answer

The gains from specialization and trade are actually based on comparative advantage, not absolute advantage. Comparative advantage allows for more efficient allocation of resources by enabling producers to specialize in goods where they have a lower opportunity cost, leading to increased overall production and trade benefits.

Which of the Following Is Not Correct