Question

A nation has a _____ in the production of a good or service if it can produce that good or service more effectively or efficiently than it can produce other goods.

1) Supreme advantage
2) Primary efficiency
3) Qualified advantage
4) Comparative advantage

Answer 1

A nation has comparative advantage when it can produce a good or service more effectively or efficiently than other goods. It is determined by looking at the opportunity cost of producing a good. By specializing in the production of goods in which they have comparative advantage, countries can enhance their overall production and benefit from international trade.

Step-by-step explanation:

A nation has comparative advantage in the production of a good or service if it can produce that good or service more effectively or efficiently than it can produce other goods. Comparative advantage is determined by looking at the opportunity cost of producing a good. The opportunity cost refers to the value of the next best alternative that must be given up in order to produce one unit of a good.

For example, let's consider two countries: Country A and Country B. Country A can produce 20 cars or 40 computers in a year, while Country B can produce 10 cars or 30 computers in a year. Although Country B can produce fewer cars and fewer computers compared to Country A, it has a lower opportunity cost for producing computers. By specializing in the production of computers and trading with Country A, Country B can benefit from its comparative advantage in computer production.

By specializing in the production of goods in which they have a comparative advantage, countries can enhance their overall production and benefit from international trade.