Comparative advantage implies that a country will specialize in producing the commodity?

Assessment: JAMB UTME - Economics - 1993 Subject: Economics

Question 1 Report

Comparative advantage implies that a country will specialize in producing the commodity?
Answer Details
Comparative advantage implies that a country will specialize in producing the commodity with the lowest opportunity cost. Opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. In the case of trade, countries specialize in producing the good or service for which they have a lower opportunity cost, meaning the cost of producing that good or service is lower compared to other countries. Therefore, a country will produce and export the good or service for which it has a comparative advantage, and import the goods or services for which it has a comparative disadvantage, thereby maximizing its economic welfare.

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