Question

A person has a comparative advantage in producing a particular good if that person Select one:

A. can produce it at lower opportunity cost than anyone else can.
B. has more human capital related to that good than anyone else has.
C. has less desire to consume that good than anyone else has.
D. has higher productivity in producing it than anyone else has.

Answer 1

A person has a comparative advantage in producing a good if they can do so at a lower opportunity cost than others, which is the basis for beneficial trade between countries.

Step-by-step explanation:

A person has a comparative advantage in producing a particular good if that person can produce it at a lower opportunity cost than anyone else can. Therefore, the correct answer is A: can produce it at lower opportunity cost than anyone else can. An absolute advantage refers to the ability of a person or economy to produce more of a good per unit of labor than another, while a comparative advantage means being able to produce a good at a lower opportunity cost, which represents the cost of not producing the next best alternative.

Countries or individuals gain from trade by specializing in goods where they hold a comparative advantage and trading for other goods. Global production and levels of consumption can thereby increase. Opportunity cost is a fundamental concept in understanding comparative advantage.