Question

As long as two people have different opportunity costs, each can gain from trade with the other, since trade allows each person to obtain a good at a price lower than his or her opportunity cost.

Answer 1

True

Step-by-step explanation:

The ability to produce goods or services at a lower opportunity cost means that one uses fewer inputs in the production process. It implies that the individual uses less of the factors of production, such as labor, capital, or land, as compared to others in the manufacturing process. Having a lower opportunity cost of production makes the output costs be lower compared to that of others.

An individual or company will lower costs is able to sell its products at a lower price than competitors. If another party has a lower opportunity cost for producing an item, their selling cost is lower than the production cost of others. It is, therefore, economical to buy from a party with a lower production cost than to produce.

Two people with different opportunity costs of producing different items will be prudent to trade than to compete with each other.