According to the concept of comparative advantage, a good should be produced in that nation in which
A) domestic opportunity cost is greatest.
B) domestic opportunity cost is the smallest.
C) money is used.
D) terms of trade are maximized.

Question

Quizplus · Accepted Answer

The concept of comparative advantage states that a good should be produced in that nation in which domestic opportunity cost is the smallest. This means that the nation should produce the good in which it has a lower opportunity cost compared to other nations. By doing so, it can produce the good more efficiently and at a lower cost, which would lead to increased international trade and gains from specialization. Therefore, option B is the correct answer.

According to the Concept of Comparative Advantage, a Good Should