Producer A has a comparative advantage over Producer B if, in producing a good:
A) A has a higher opportunity cost of producing the good than does B.
B) A has a lower opportunity cost of producing the good than does B.
C) A can produce more of the good than B can in a given time period.
D) A has to trade off more than B does to produce the good.

Question

Quizplus · Accepted Answer

Comparative advantage refers to the ability of one producer to produce a good more efficiently than another producer. This means that the producer with the lower opportunity cost of producing a good has a comparative advantage over the other producer. Opportunity cost refers to the cost of producing one good in terms of the foregone production of another good. Therefore, if Producer A has a lower opportunity cost of producing a good than Producer B, then Producer A has a comparative advantage over Producer B.

Producer a Has a Comparative Advantage Over Producer B If