A nation has a comparative advantage in the production of cars over another nation if:
A)it can produce cars with fewer resources than the other country.
B)it can produce cars at a lower opportunity cost than the other country.
C)it can produce cars at a higher opportunity cost than the other country.
D)it can produce cars at the same opportunity cost and its consumers have a stronger preference for cars than consumers in the other country.

Question

A nation has a comparative advantage in the production of cars over another nation if:
A)​it can produce cars with fewer resources than the other country.
B)​it can produce cars at a lower opportunity cost than the other country.
C)​it can produce cars at a higher opportunity cost than the other country.
D)​it can produce cars at the same opportunity cost and its consumers have a stronger preference for cars than consumers in the other country.

Quizplus · Accepted Answer

A nation has a comparative advantage in the production of cars over another nation if it can produce cars at a lower opportunity cost than the other country. This means that the nation can produce cars with fewer resources, or forego fewer other goods or services, in order to produce a unit of cars. Thus, it has a comparative advantage in producing cars and should specialize in producing them, while the other nation should focus on producing the goods in which it has a comparative advantage.

A Nation Has a Comparative Advantage in the Production of Cars