For a nation to engage in international trade on the basis of comparative advantage,it should

A) purchase resources from other nations until it acquires a comparative advantage in at least one product.
B) produce only those goods in which it has an absolute advantage over other nations.
C) specialize in producing those products that have the lowest opportunity cost per unit compared to other nations,then trade some if its output.
D) specialize in the production of those goods that have the highest opportunity cost,then trade the excess output.

Question

Litzy Saenz · Accepted Answer

Final Answer : C, Explanation :  Comparative advantage theory states that a nation should specialize in the production of goods that have the lowest opportunity cost per unit compared to other nations, and then trade some of its output. This allows the nation to produce more efficiently and at a lower cost than other nations, leading to greater global economic efficiency and gains from trade. Therefore, purchasing resources from other nations until it acquires a comparative advantage (A) or producing only those goods in which it has an absolute advantage (B) do not take into account opportunity cost and are not the basis of comparative advantage theory. Specializing in the production of goods that have the highest opportunity cost (D) would not lead to efficient use of resources and would result in higher production costs.

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