Which statement is true?A) Comparative advantage and absolute advantage are identical terms.B) A country can have a comparative advantage without having an absolute advantage.C) The U.S.has a comparative advantage and an absolute advantage with nearly all of its trading partners.D) Trade cannot take place unless each trading partner has an absolute advantage in the production of the good or service that it is trading.

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Delilah Darby · Accepted Answer

Final Answer : B, Explanation :  Comparative advantage and absolute advantage are not identical terms. A country can have a comparative advantage in producing a good or service if it can produce it at a lower opportunity cost than its trading partners, even if it does not have an absolute advantage (i.e. it is not the most efficient producer). The U.S. does not have a comparative advantage and an absolute advantage with all of its trading partners, as each country has different strengths and weaknesses in production. Trade can still take place even if each partner does not have an absolute advantage; it is the comparative advantage that determines the gains from trade.

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