Comparative advantage emerges because of the presence of:
A) trade.
B) differing opportunity costs.
C) marginal benefits equaling marginal costs.
D) scarcity.
E) incentives.

Question

Quizplus · Accepted Answer

Comparative advantage arises due to differing opportunity costs, meaning that different countries or individuals have different resources and abilities, making them relatively better at producing certain goods or services. This leads to potential gains from trade, where each party can specialize in what they are relatively better at producing and engage in mutually beneficial trade. The other options (A, C, D, E) are important economic concepts, but they do not directly explain the emergence of comparative advantage.

Comparative Advantage Emerges Because of the Presence Of