A country has an absolute advantage in producing a good if... 1. It can produce

Question

A country has an absolute advantage in producing a good if...

1. It can produce that good at a lower opportunity cost than its neighbor.

2. A country can produce more of that good than its neighbor with the same amount of resources.

3. A country can produce more of that good than its neighbor if it concentrates all of its resources to that good.

4. A country's citizens are more productive than its neighbor's.

Which of the following is a benefit of trading with your neighbor according to comparative advantage?

1. It allows both countries to be more efficient in the production process.

2. It allows one country to gain, but often at its neighbor's expense.

3. There are often no benefits to trade.

4. It allows both countries to enjoy production possibilities outside of it's individual production possibilities frontier.

1. It can produce that good at a lower opportunity cost than its neighbor.

2. A country can produce more of that good than its neighbor with the same amount of resources.

3. A country can produce more of that good than its neighbor if it concentrates all of its resources to that good.

4. A country's citizens are more productive than its neighbor's.

Explanation / Answer

a) A country will have an absolute advantage if they are efficient in the production of a good when compared to others. it will happen when they are producing more goods while using the same amount of resources. The answer is "B".

b) "A"

Trading as per the comparative advantage will allow the nation to be more efficient in the production process. The answer is "A".  

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