If a country has
A) an absolute advantage in producing a good, it definitely also has a comparative advantage in producing that good.
B) an absolute advantage in producing a good, it might or might not have a comparative advantage in producing that good.
C) a comparative advantage in production of a good, it must also have an absolute advantage in producing that good.
D) an absolute advantage in producing a good, it definitely will not have a comparative advantage in producing that good.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

Just because a country has an absolute advantage in producing a good, it does not necessarily mean that it has a comparative advantage. Comparative advantage takes into account the opportunity cost of producing one good versus another. Even if a country can produce a good more efficiently than another country, it may still choose to specialize in producing a different good where it has a lower opportunity cost. Therefore, option B is the correct answer.

If a Country Has