Question

A nation having absolute disadvantages in the production of two goods with respect to another nation has ___________ in the production of the good in which its absolute disadvantage is less.

A. a comparative advantage

B. an absolute advantage

C. a mercantilist advantage

D. none of the above

E. two of A, B, and C

Answer 1

A nation having absolute disadvantages in the production of two goods with respect to another nation has a comparative advantage in the production of the good in which its absolute disadvantage is less.

Step-by-step explanation:

A nation having absolute disadvantages in the production of two goods with respect to another nation has a comparative advantage in the production of the good in which its absolute disadvantage is less. Comparative advantage means that even though a country may be less efficient in producing a particular good compared to another country, it can still benefit from specializing in and exporting the goods it can produce with the least disadvantage.