What is the primary idea behind comparative advantage?
A. Producing more than others
B. Specializing in what can be made at the lowest opportunity cost
C. Trading only with rich countries
D. Avoiding imports to protect jobs
Answer (1)
The correct answer is letter B. Even if one country can produce everything, it should focus on what it does best at the lowest cost. The Philippines might not produce cars cheaply but has a comparative advantage in overseas labor and services.
