Question

A country can have a(n) ____ with a trading partner in the production of both goods, but it cannot have a(n) ____ in producing both goods.

absolute advantage; comparative advantage
greater efficiency; absolute advantage
comparative advantage; increasing opportunity cost
decreasing opportunity cost; absolute advantage
increasing opportunity cost; absolute advantage

Answer 1

Answer: absolute advantage and comparative advantage.

Explanation: we know that Absolute advantage refers to the advantage of the superior producer. We can understand it like this;

let's say Apple has only one production unit in The US so if we consider rest of the world as it's trading partner then they will have to buy the iPhone produced as what so ever price The US wants to sell it.

By the term Comparative advantage we understand that it's the ability to produce any good at a lower opportunity cost then it's competitors.

So if The US is producing any good X at a given price and there is some other country say China producing the same good then The US cannot be the only one in the market so in this case the advantage becomes comparative rather than absolute.