Question

Which of the following is true?

a. A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage.
b. A nation can have a comparative advantage in the production of every good, but not an absolute advantage.
c. A nation cannot have an absolute advantage in the production of every good.
d. A nation cannot have a comparative advantage in the production of every good.

Answer 1

Answer: Option (D) is correct.

Step-by-step explanation:

Correct option: A nation cannot have a comparative advantage in the production of every good.

A country has a comparative advantage in producing a commodity if the opportunity cost of producing that commodity in terms of other commodity is lower than the other country.

While calculating the opportunity cost of producing a commodity, country takes into account both the commodities. Hence, it was not possible that a country is having comparative advantage in the production of every commodity.