Question

The principle of comparative advantage indicates that trade is a zero-sum activity. a nation can gain by specializing in the production of the goods it can produce at a low opportunity cost and trade for goods it can produce only at a high cost. comparative advantage applies to nations and not individuals.

Answer 1

Answer: Option (b) is correct.

Step-by-step explanation:

According to the theory of comparative advantage, 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 in that country as compared to the other country.

Hence, a country exports the commodity in which it has a comparative advantage and imports the commodity in which it has a comparative disadvantage because the opportunity cost of producing these commodities is higher than the other country.