A country has a comparative advantage in producing a good when:

A It produces at lowest absolute cost

B It produces at lowest opportunity cost relative to other goods

C It has the most resources

D It has the largest population

✓ Correct Answer: Option B

Comparative advantage is based on opportunity cost, not absolute cost — trade benefits both parties.

💡 Why is B) the correct answer?

The correct answer to the question "A country has a comparative advantage in producing a good when:" is Option B: It produces at lowest opportunity cost relative to other goods.

The other options — A) It produces at lowest absolute cost, C) It has the most resources, D) It has the largest population — are incorrect for this CFA Exam Prep question. As explained above: Comparative advantage is based on opportunity cost, not absolute cost — trade benefits both parties.

📚 About This CFA Exam Prep Practice Question

This 2-level CFA Exam Prep question from the Economics topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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A country has a comparative advantage in producing a good when:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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