If the cost for producing a particular good is lower for one producer than another, the former producer has for producing the

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NeTakaya

3 years ago

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If the cost for producing a particular good is lower for one producer than another, the former producer has for producing the

good.

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1 answer:

Marta_Voda [28] · Answer 1 · 2022-07-13T17:46:43+03:00

Answer

Hi,

If the opportunity cost of producing a particular good is lower for one producer than another, the former producer has comparative advantage for producing the good.

Explanation

A comparative advantage occurs when a producer is able to produce goods by using fewer resources at a lower opportunity cost. Increasing the production of one good will mean that less goods for another can be produced. This theory is advantageous in free trade because a producer can be able to realize higher output gains by selling goods in which he or she enjoys comparative advantage.

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