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

Question

Quizplus · Accepted Answer

When a country loses its comparative advantage in the production of a good, it means that another country has now become relatively more efficient in producing that good. However, the first country may still have an absolute advantage in the production of that good, meaning it can produce more units of the good with the same resources. The country that has lost its comparative advantage should then focus on producing goods in which it has a comparative advantage, and trade with the other country that now has a comparative advantage in the previously produced good. This allows both countries to benefit from trade and specialization, and ultimately leads to increased economic growth and efficiency.

When a Country Loses Its Comparative Advantage in the Production