Responses
Country B experiences decreasing marginal utility in its production of televisions.
Country B experiences decreasing marginal utility in its production of televisions.
Country A has a lower opportunity cost for producing televisions.
Country A has a lower opportunity cost for producing televisions.
Country A can produce televisions more cheaply.
Country A can produce televisions more cheaply.
Country B charges higher prices for its televisions.
1 answer
Country A has a comparative advantage over Country B in the production of televisions when Country A has a lower opportunity cost for producing televisions.
Comparative advantage is determined by the opportunity cost of producing a good. If Country A can produce televisions at a lower opportunity cost compared to Country B, it is advantageous for Country A to specialize in television production, while Country B should focus on producing goods for which it has a lower opportunity cost.
