Final answer:
The resources and capabilities must be 'rare; costly to imitate' to potentially become sources of competitive advantage, as they are more valuable and cannot be easily replicated by competitors.
Step-by-step explanation:
To have the potential to become sources of competitive advantage, resources and capabilities must be non-substitutable, valuable, and the correct answer is rare; costly to imitate. These characteristics are important because they ensure that a resource cannot be easily replaced or duplicated by competitors. This makes the resource more valuable and can give a company an edge over its competitors. The combination of these attributes can help a company sustain a competitive advantage over time. On the other hand, if a resource is easy to imitate or not rare, it is less likely to provide a sustainable advantage since competitors can replicate it or find it readily in the market.
A public good is nonexcludable and non-rival, which makes it difficult to sell to individual consumers. This concept demonstrates the complexity of market dynamics and the fact that not all resources are easily controlled or harnessed for individual gain, unlike the tangible, exclusive resources that can confer a competitive advantage. Furthermore, absolute advantage and comparative advantage are concepts related to how resources and capabilities can position entities—such as countries—in a more beneficial spot in international markets through trade.