Final answer:
The correct answer is that a nation should specialize in the product it can produce at the lowest opportunity cost, forming the basis of comparative advantage and international trade.
Step-by-step explanation:
The central idea behind comparative advantage is that a nation should specialize in the product that it can produce with the lowest opportunity cost. This concept is foundational to international trade and economics, suggesting that each country should produce and export goods for which they have a comparative advantage, thereby maximizing efficiency and gains from trade.
By focusing on goods with the lowest opportunity cost, a country can produce more efficiently than another country. The theory also indicates that even if one nation is more efficient at producing all goods (absolute advantage), there can still be benefits to trade due to differences in opportunity costs between countries, thus fostering international trade.
Comparative advantage is calculated by comparing the opportunity costs of producing goods in different countries, which can then guide decisions about what goods a country should produce and trade. This has been evident in trade patterns around the world, notably in countries like the United States where trade with geographically close and high-income countries such as Canada and Mexico is significant.