574
QuizMultiple Choice

Cumulative Exam — Cumulative exam

Question 574 • Career Explorations A

Which situation is an example of comparative advantage in an international market?

Answer
A
Country A decides to grow extra potatoes so they have more to export, while Country B does not grow potatoes to export.
B
Factories in Country A and Country B produce the same number of tablet computers. Country A’s factories could be used instead to build more laptops than the factories in Country B.
C
Country A invests in a new technology while Country B chooses to invest in education.
D
Country A can produce 100 units of rice per acre of farmland, while Country B can only produce 70 units of rice per acre of farmland using the same resources.

Explanation

Comparative advantage means being able to produce a good at a lower opportunity cost. In B, both countries make the same number of tablets, but Country A could use its factories to make more laptops than Country B could, suggesting it gives up fewer tablets for each laptop. D describes higher productivity in rice, which is absolute advantage, not comparative advantage.

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