Question

A comparative advantage is the ability of a country to produce a particular good or service at a lower ____________ than another country. a. opportunity cost b. production cost c. absolute advantage d. manufacturing advantage Please select the best answers from the choices provided. A B C D

Answer 1

Answer

Hi,

Correct answer option is {a}

Explanation

Comparative advantage occurs when a nation produces a good or service for a lower opportunity cost than other countries. In this case, the advantages of buying their goods or services will surpass the disadvantages. This is to say that country may not be the best nation in production of a particular good or service but the good or service offers a low opportunity cost for other nations to import. A good example is oil-producing nations who have a comparative advantage in chemicals because the oil is locally produced thus a cheap raw material for chemicals as compared to nations without oil production.

Best of Luck!