Asked by Nyasia Green on May 18, 2024
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If country A has a higher opportunity cost in producing good X than does country B,then we know that
A) country B has an absolute advantage in the production of product X.
B) country B has a comparative advantage in the production of product X.
C) country A has an absolute advantage in the production of product X.
D) country A has a comparative advantage in the production of product X.
Higher Opportunity Cost
The increased potential loss of choosing one option over another, indicating a sacrifice of higher value alternatives.
Absolute Advantage
The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.
Comparative Advantage
The capacity of a nation, person, business, or area to generate a product or offer a service with a smaller opportunity cost compared to its rivals.
- Dissect the principles of comparative and absolute advantage relevant to trade dynamics.
- Perceive the contribution of opportunity costs to the development of trading bonds.
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Learning Objectives
- Dissect the principles of comparative and absolute advantage relevant to trade dynamics.
- Perceive the contribution of opportunity costs to the development of trading bonds.
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