Question

When does one country have a comparative advantage over another country?

A) When the opportunity cost of its production is lower
B) When its trade barriers are higher
C) When its infrastructure is more advanced
D) When its workers don't need to be paid as much

Answer 1

A country has a comparative advantage over another country when its opportunity cost of production is lower.

Step-by-step explanation:

A country has a comparative advantage in the production of a good when its opportunity cost of production is lower compared to other countries. This means that the country can produce the good more efficiently, using fewer resources or time.

Comparative advantage allows countries to specialize in producing goods in which they have a lower opportunity cost and trade with other countries for goods in which they have a higher opportunity cost. By specializing and trading based on comparative advantage, global production of goods and services can increase, leading to higher levels of consumption for all.