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6 May, 19:38

According to the law of comparative advantage, what should be the distinguishing characteristics of the goods a nation imports?

(A) They have the lowest capital costs.

(B) They can be domestically produced cheaply.

(C) They cannot be domestically produced cheaply.

(D) They have the greatest domestic demand.

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Answers (1)
  1. 6 May, 22:06
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    The correct answer is option C.

    Explanation:

    The law of comparative advantage states that a country will produce and export the commodity it has a comparative advantage in producing.

    In other words, if the country can produce good cheaply or at a lower opportunity cost.

    The good that cannot be produced cheaply or has a higher opportunity cost will be imported from the country that produces it cheaply.
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