A Country Has a Comparative Advantage When the Opportunity Cost

question 17

Multiple Choice

A country has a comparative advantage when the opportunity cost of producing a good in terms of the

• A) monetary value of other forgone goods is lower than that of other countries.
• B) monetary value of other forgone goods is greater than that of other countries.
• C) forgone output of other goods is higher than that of other countries.
• D) forgone output of other goods is lower than that of other countries.
• E) forgone output of other goods is equal to that of other countries.

---

Definitions:

Economic Resource

Assets, materials, or inputs used to produce goods and services and satisfy human wants, including land, labor, capital, and entrepreneurship.

Capital

Man-made physical objects (factories, roads) and intangible ideas (the recipe for cement) that do not directly satisfy human wants but which help to produce goods and services that do satisfy human wants; also called capital goods. One of the four economic resources.

Economic Rent

Any payment to a resource provider or seller of output in excess of the economic cost (opportunity cost) of providing that resource or output.