Question

When does country a have a comparative advantage over country b in the production of televisions?

a.country a has a lower opportunity cost for producing televisions.

b.country a can produce televisions more cheaply.

c.country b experiences decreasing marginal utility in its production of televisions.

d.country b charges higher prices for its televisions?

Answer 1

Answer:

a.country a has a lower opportunity cost for producing televisions.

Explanation:

Central to the theory of comparative advantage is opportunity cost, opportunity cost is the gain an individual, firm, or government will have to forgo when they choose an option instead of another.

In economics, comparative advantage is achieved when a country can produce goods or services at a lower opportunity cost than others.

The theory of comparative advantage was propounded by  David Ricardo in his book 'The Principles of Political Economy and Taxation' (1817).

Therefore country a has comparative advantage in the production of television over country b, if country a has a lower opportunity cost for producing televisions compared to b.