Question

A nation that has a comparative advantage in producing a good or service compared to

Answer 1

Answer:

Opportunity cost

Explanation:

A country is said to have a comparative advantage in producing a good, if it has a lower opportunity cost of producing that good in comparison to the other country. For instance if the opportunity cost of producing Wheat in U.S is 2. While that in China is 1. It shows that China has a comparative advantage in producing wheat as compared to the U.S.

So a nation that has a comparative advantage in producing a good or service compared to the other nation can produce that good or service with a lower opportunity cost.

Efficiency, Profit and Resource cost are not directly related to comparative advantage. Although efficiency can contribute towards lower opportunity cost but it is not a scale used for international trade.

Thus, lower opportunity cost is the best alternative.