Which of the following best defines 'comparative advantage' in international trade?

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Question

Which of the following best defines 'comparative advantage' in international trade?

Accepted Answer

The ability to produce a good at a lower opportunity cost than another country — Comparative advantage refers to producing a good at a lower opportunity cost relative to another country, not necessarily using fewer resources (that is absolute advantage). A trade surplus describes exports exceeding imports, which is unrelated to comparative advantage. Producing a wider variety of goods does not define comparative advantage.

Answer

The ability to produce a good at a lower opportunity cost than another country

Answer

The ability to export more goods than are imported in a given year

Answer

The ability to produce a greater variety of goods than trading partners

Answer

The ability to produce a good using fewer resources than any other country

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