g In the theory of comparative advantage, a good should be produced in that nation where Multiple Choice the production possibilities line lies further to the right than the trading possibilities line. its cost is least in terms of alternative goods that might otherwise be produced. its absolute cost in terms of real resources used is least. its absolute money cost of production is least.

its cost is least in terms of alternative goods that might otherwise be produced

Explanation:

Comparative Advantage

This is simply explained as when an individual has an opportunity cost of performing a task is lower than the other individuals opportunity cost that is it is more efficient. It is the usual fundamental basis for international trade. Its principle includes production at a maximum peak to be achieved if each individual focus on the job or activities for which his or her opportunity cost is lowest.

Opportunity Cost

This is simply known as the highest valued of an alternative that must be given up so as to be involved or engage in an activity/job or task. There are several sources of a comparative advantage. They includes;

1. Climate and natural resources

2. Relative abundance of labor and capital

3. Technology

4. External economies etc.

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