Which of the following statement is true?
A) A country has a comparative advantage in producing a good if the opportunity cost for producing the good is higher at home than in the other country.
B) A country has a comparative advantage in producing a good if the opportunity cost for producing the good is the same at home and in the other country.
C) A country has a comparative advantage in producing a good if the opportunity cost for producing the good is lower at home than in the other country.
D) None of the above are true.

Question

Quizplus · Accepted Answer

Comparative advantage refers to the ability of a country to produce a good or service at a lower opportunity cost than other countries. Therefore, a country has a comparative advantage in producing a good if the opportunity cost for producing the good is lower at home than in the other country. Option A is incorrect as a higher opportunity cost at home would imply that it is less efficient for the country to produce the good. Option B is incorrect as having the same opportunity cost would imply that both countries have similar efficiency levels in producing the good. Option D is incorrect as there is a true statement among the options.

Which of the Following Statement Is True