Question

question 38
which of the following statements about comparative advantage is not true?

• comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources
• the principle of comparative advantage applies to countries as well as to individuals
• economists use the principle of comparative advantage to emphasize the potential benefits of free trade
• a country may have a comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good

Explanation:

1. Recall the definitions:

• Comparative advantage is about having a lower opportunity cost in producing a good, while absolute advantage is about producing a good using the fewest resources.
• The first option describes absolute advantage (using fewest resources), not comparative advantage.
• The second option is true: comparative advantage applies to countries and individuals.
• The third option is true: economists use comparative advantage to support free - trade benefits.
• The fourth option is true: a country can have comparative advantage (lower opportunity cost) even without absolute advantage (producing with fewest resources).

Answer:

A. Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources