Is it possible for a country to have a comparative advantage in producing a good without also having an absolute advantage? A. will have a comparative advantage if it has a lower opportunity cost of producing that good. B. will not have a comparative advantage because it has fewer resources. C. will have a comparative advantage if it is able to produce that good at a low total cost. D. will have a comparative advantage if it produces more efficiently. E. will have a comparative advantage if it devotes more resources toward that good's production.

Question

UpStudy AI · Accepted Answer

Yes, it is possible for a country to have a **comparative advantage** in producing a good without having an **absolute advantage**. The concept of comparative advantage is based on the idea of **opportunity cost**, not merely on the total resources or efficiency in production.

**Correct Answer:**

**A. will have a comparative advantage if it has a lower opportunity cost of producing that good.**

**Explanation:**

- **Comparative Advantage:** A country has a comparative advantage in producing a good if it can produce that good at a lower opportunity cost compared to other countries. This means that the country sacrifices less of other goods to produce this particular good.
  
- **Absolute Advantage:** A country has an absolute advantage if it can produce more of a good with the same amount of resources or the same amount with fewer resources compared to another country.

**Example:**
Imagine two countries, Country X and Country Y, producing cars and computers.

- **Country X:** Produces 10 cars or 5 computers (Opportunity cost of 1 car = 0.5 computers)
- **Country Y:** Produces 6 cars or 6 computers (Opportunity cost of 1 car = 1 computer)

Here, Country X has an absolute advantage in producing cars and a comparative advantage in producing cars (since it sacrifices fewer computers per car). Country Y might have a comparative advantage in producing computers because its opportunity cost for computers is lower relative to cars.

**Why Other Options Are Incorrect:**

- **B.** Having fewer resources doesn't inherently determine comparative advantage; it's about opportunity cost.
- **C.** Low total cost relates more to absolute advantage.
- **D.** Producing more efficiently typically refers to absolute advantage.
- **E.** Devoting more resources doesn't necessarily affect comparative advantage unless it changes the opportunity costs.

Understanding comparative advantage allows countries to specialize in the production of goods where they are relatively more efficient, leading to increased overall economic welfare through trade.

**Answer:**  
A. will have a comparative advantage if it has a lower opportunity cost of producing that good.
A country can have a comparative advantage in producing a good even without an absolute advantage if it has a lower opportunity cost for that good compared to other countries.

Real Tutor Solution

Answer

Solution

Mind Expander

Related Questions

Latest Economics Questions