Question

What does it mean when we say that a country has a comparative advantage in producing a product?

A. It means that the country can produce the product at an opportunity cost that is lower than any other country's opportunity cost.
B. It means that the country has a higher opportunity cost of producing the product than any other country has.
C. It means that any other country has a lower opportunity cost of producing the product.
D. It means that the country's absolute cost of producing the product is higher than its opportunity cost.

Answer 1

A country has a comparative advantage in producing a product if it can produce it at a lower opportunity cost than other countries, which enables it to trade effectively and contributes to global economic efficiency.

Step-by-step explanation:

When we ask, what does it mean when we say that a country has a comparative advantage in producing a product?, we are inquiring about a country's ability to produce a good at a lower opportunity cost than other countries. The correct answer is A. It means that the country can produce the product at an opportunity cost that is lower than any other country's opportunity cost. This is different from absolute advantage, which refers to a country's ability to produce more of a good per unit of labor compared to others. Having a comparative advantage implies that the country is more efficient in producing a specific product compared to others, considering the opportunity cost, which is the value of what is foregone to produce that product. Countries gain from trade by specializing based on comparative advantage, which leads to increased global production and higher consumption levels for all.