quizlet If a country can produce more of a good or service, it has a(n) advantage. If the country can produce a good or service

Question

2 years ago

5

at lower opportunity cost, it has a(n) advantage

1 answer:

poizon [28] · Answer 1 · 2023-08-02T07:19:39+03:00

If the country can produce a good or service at a lower opportunity cost, it has a comparative advantage.

<h3>What is comparative advantage?</h3>

In an economic model, agents have a comparative advantage over others if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to the trade.
Comparative advantage describes the economic reality of trade advantages for people, firms, or nations as a result of disparities in their factor endowments or technological progress.
(The absolute advantage, comparing output per time (labor efficiency) or per quantity of raw material (monetary efficiency), is typically considered more intuitive but less accurate – productive trade is possible as long as the opportunity costs of manufacturing commodities vary between countries.)

Therefore, if the country can produce a good or service at a lower opportunity cost, it has a comparative advantage.

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