If Nigeria has comparative advantage over Ghana in producing cocoa, this means _________?

A. Nigeria produces cocoa more cheaply than Ghana
B. Nigeria and Ghana produce at the same level
C. Ghana produces cocoa more than Nigeria
D. Nigeria produces more cocoa than Ghana

Correct Answer:

Option A – Nigeria produces cocoa more cheaply than Ghana

Explanation

Comparative advantage is the ability of an individual or group (Nigeria as the case maybe) to carry out a particular economic activity (such as making a specific product) more efficiently than another activity. Comparative advantage is when a country produces a good or service for a lower opportunity cost than other countries.