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6 December, 12:36

Which of the following is true?

a. A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage.

b. A nation can have a comparative advantage in the production of every good, but not an absolute advantage.

c. A nation cannot have an absolute advantage in the production of every good.

d. A nation cannot have a comparative advantage in the production of every good.

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Answers (1)
  1. 6 December, 14:32
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    Answer: Option (D) is correct.

    Explanation:

    Correct option: A nation cannot have a comparative advantage in the production of every good.

    A country has a comparative advantage in producing a commodity if the opportunity cost of producing that commodity in terms of other commodity is lower than the other country.

    While calculating the opportunity cost of producing a commodity, country takes into account both the commodities. Hence, it was not possible that a country is having comparative advantage in the production of every commodity.
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