Which of the following statements is always true?
A) Absolute advantage implies comparative advantage.
B) Comparative advantage does not require absolute advantage.
C) Absolute advantage requires comparative advantage.
D) Comparative advantage requires absolute advantage.

Question

Quizplus · Accepted Answer

Comparative advantage means being able to produce a good or service at a lower opportunity cost than others. It does not require being the most efficient producer or having an absolute advantage. Absolute advantage, on the other hand, means being the most efficient producer of a good or service. However, having an absolute advantage in one good does not necessarily mean having a comparative advantage in that good or any other good. Therefore, choice B is always true.

Which of the Following Statements Is Always True