Statement I: The law of comparative advantage states that total output is greatest when each product is made by the country that has the lowest opportunity cost.
Statement II: Absolute advantage is not necessary for trade to take place,but comparative advantage is.

A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.

Comparative Advantage

The talent of a country or business to create a certain product or service more efficiently, incurring lower opportunity costs than competing entities.

Absolute Advantage

A condition where an entity can produce a good at a lower cost in terms of labor, resources, and time than another entity producing the same good.

Opportunity Cost

Forgoing possible gains from alternative choices when one path is taken.