An economy is said to have a comparative advantage in the production of a good if it can produce that good:
A)with more resources than another economy.
B)with a higher opportunity cost than another economy.
C)outside its production possibility frontier.
D)at a lower opportunity cost than another economy.

Question

Quizplus · Accepted Answer

Comparative advantage means that an economy can produce a good at a lower opportunity cost than another economy. This means that the economy can produce the good more efficiently, using fewer resources, or sacrificing fewer alternative goods. Option A is incorrect because having more resources does not necessarily mean that an economy has a comparative advantage in producing a good. Option B is incorrect because having a higher opportunity cost would mean that an economy is less efficient in producing the good, which would indicate a comparative disadvantage. Option C is incorrect because producing outside the production possibility frontier is impossible due to limited resources.

An Economy Is Said to Have a Comparative Advantage in the Production