CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Comparative advantage means that countries that produce goods for which they have ______
A. the lower opportunity cost relative to their trading partner will gain from international trade.
B. the lowest absolute cost will gain from international trade.
C. a large domestic market will gain from international trade.
Explanation: In order to gain from mutual trade, countries should produce goods for which they have a relative advantage in terms of opportunity cost. They need not be the lowest absolute cost producers. Comparative advantage is all about the best or most efficient use of a country's resources.

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