In country A the opportunity cost of 50 flash drives is 100

In country A, the opportunity cost of 50 flash drives is 100 e-books. In country B, the opportunity cost of 50 flash drives is 40 e-books. Country A has a comparative advantage in flash drive production.

Select one:

True

False

Solution

False.

A country has a comparative advantage in producing that good if the opportunity cost of producing that good is lower in that country as compared to another country. Opportunity cost of producing 50 flash drives is less when it is produced by Country B. So, Country B has comparative advantage in flash drive.