Question

When a producer has the ability to produce a good or service at a lower opportunity cost than others, economists say the producer:

A) Has an Absolute Advantage
B) Has a Comparative Advantage
C) Faces Diminishing Marginal Returns
D) Is Not Efficient

Answer 1

An economy or individual has a comparative advantage when they produce a good or service at a lower opportunity cost than others. This allows for specialization, trade, increased production, and higher levels of consumption for all.

Step-by-step explanation:

An economy or individual has a comparative advantage when they can produce a good or service at a lower opportunity cost than others. This means that they can produce more of that good or service in comparison to the amount of other goods or services that they would have to give up to produce it. Having a comparative advantage allows for specialization and trade, which can result in increased production and higher levels of consumption for all.