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Agriculture Economics QUESTION #11902
Question 1
The principle of comparative advantage states that a country (or producer) should specialize in producing the good for which it has:
  • The lowest absolute cost of production
  • The lowest opportunity cost relative to other producers✔️
  • The highest total output capacity
  • The largest labor force
Correct Answer Explanation
Comparative advantage is based on relative (opportunity) cost, not absolute cost — a producer specializes where its opportunity cost is lowest.