When a country loses its comparative advantage at producing a good it will:
A) stop trading and become self-sufficient.
B) gain a comparative advantage at producing another good.
C) become a loser in trade in the long run.
D) still have an absolute advantage at producing the good.

Question

Quizplus · Accepted Answer

When a country loses its comparative advantage at producing a good, it means that other countries can produce that good more efficiently. However, the country can still gain a comparative advantage at producing another good. By specializing in the production of the good in which it has a comparative advantage, the country can still benefit from trade and increase its overall welfare.

When a Country Loses Its Comparative Advantage at Producing a Good