When a country possesses a comparative advantage in the production of one good or service, it:
A)means that the country's opportunity cost is higher than of the other countries.
B)discourages specialization.
C)promotes greater self-sufficiency.
D)permits gains from trade to be realized due to a more efficient use of resources.
E)means that the country uses a capital intensive method of production.

Question

Quizplus · Accepted Answer

When a country possesses a comparative advantage in the production of one good or service, it means that it can produce that good or service more efficiently than other countries. This allows the country to specialize in that area and allocate its resources more efficiently, resulting in gains from trade. Therefore, option D is correct. Options A, B, C, and E do not reflect the concept of comparative advantage.

When a Country Possesses a Comparative Advantage in the Production