ECONOMICS
BARRIERS TO TRADE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A country with an absolute advantage will always have a comparative advantage in producing products.
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A country with a comparative advantage can produce a greater output of a products than a country with an absolute advantage.
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A country with an absolute advantage can produce a product at a lower opportunity cost than a country with a comparative advantage in producing all products.
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A country with a comparative advantage can produce a product at a lower opportunity cost, even if another country has an absolute advantage in the production of all goods.
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Detailed explanation-1: -A country has an absolute advantage if it produces a large number of goods with the same resources as provided to another country whereas the country has a comparative advantage if the Country can produce a particular product with better quality at a lower price than another country.
Detailed explanation-2: -Which relationship best illustrates a comparison absolute advantage and comparative advantage? A country with an absolute advantage can produce a product at a lower opportunity cost than a country with a comparative advantage in producing of all goods.
Detailed explanation-3: -For absolute advantage, we simply need to compare the quantities of output, and the country with the larger quantity wins the absolute advantage. However, comparative advantage is calculated by finding the opportunity cost for each country, and the country with the lower opportunity cost wins the comparative advantage.
Detailed explanation-4: -Absolute advantage is one when a country produces a commodity with the best quality and at a faster rate than another. On the other hand, comparative advantage is when a country has the potential to produce a particular product better than any other country.
Detailed explanation-5: -Yes, it is possible for a country to have both an absolute and comparative advantage. However, this would only be possible with one good because: A comparative advantage only exists when a country can produce a good at a lower opportunity cost when compared to alternatives and other countries.