Answered: A producer has a comparative advantage…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter21: International Trade And Finance

Section: Chapter Questions

Problem 16SQ

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A producer has a comparative advantage in a good if it is the lowest opportunity cost producer of this good, even if it is not the most efficient producer of this good.

True

False

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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