Asked by jo
True or False? Higher opportunity costs equal a greater comparative advantage.
True
False
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Answered by
GPT-5 mini
AI
False.
Comparative advantage is based on having the lower opportunity cost of producing a good. A higher opportunity cost means you give up more of other goods to produce that item, so you have less (not greater) comparative advantage. Example: if A gives up 3 widgets to make one gadget and B gives up 1 widget to make one gadget, B has the comparative advantage in gadgets.
Comparative advantage is based on having the lower opportunity cost of producing a good. A higher opportunity cost means you give up more of other goods to produce that item, so you have less (not greater) comparative advantage. Example: if A gives up 3 widgets to make one gadget and B gives up 1 widget to make one gadget, B has the comparative advantage in gadgets.
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