CLEP Microeconomics Exam Prep

Answer - A - Comparative advantage is the correct term for the ability to produce something with a lower opportunity cost.

Key Takeaway: Opportunity cost refers to the concrete value of what you are giving up in the trade off (often in terms of time or money). When one individual, economy, country, etc. can produce something with a lower opportunity cost than another, it is known as comparative advantage. You should not confuse this with absolute advantage, which is when an entity can produce more of a good or service than its competitors with the same exact resources.