What is comparative advantage? A. The ability to produce more of a good or service than competitors using the same amot B. The gain from consuming a product whose benefit is greater than its cost. C. The gain from selling a product for more than it costs to produce that product. D. The ability to use all available resources to produce output. E. The ability to produce a good or service at a lower opportunity cost than other producers

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The correct answer is:

**E. The ability to produce a good or service at a lower opportunity cost than other producers.**

**Explanation:**

*Comparative advantage* is a fundamental concept in economics that explains how and why individuals, businesses, or countries can benefit from specializing in the production of certain goods or services and then trading with others. It occurs when a producer can create a good or service at a lower opportunity cost compared to others. This means that even if one party is less efficient in producing all goods compared to another, there can still be mutual benefits from trade based on comparative advantages.

**Example:**
- **Country A** can produce both wine and cloth more efficiently than **Country B**.
- However, **Country A** has a greater efficiency advantage in producing wine, while **Country B** has a smaller disadvantage or might be relatively better at producing cloth.
- **Country A** benefits by specializing in wine, and **Country B** specializes in cloth.
- Both countries can then trade, allowing each to enjoy more of both goods than they could produce on their own.

This specialization and trade based on comparative advantage lead to increased overall economic efficiency and higher standards of living for all parties involved.
**Comparative advantage** is the ability to produce a good or service at a lower opportunity cost than others, allowing for efficient specialization and trade.

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