APICS Certified in Logistics, Transportation and Distribution (CLTD) — Question 32

According to the Theory of Comparative Advantage, which of the following reasons justifies a country to export a product?

Answer options

• A. The exporting country produces the product utilizing less labor than other countries.
• B. The exporting country's wage rate in producing the good is lower than in other countries.
• C. The exporting country's productivity is higher in producing the good than the productivity of other countries.
• D. The exporting country's cost of producing the good, relative to other goods, is at least as low as in other countries.

Correct answer: A

Explanation

The correct answer is A because a country should export goods that it can produce more efficiently, which implies using less labor relative to other nations. Options B and C focus on wage rates and productivity levels, which, while relevant, do not directly address the comparative efficiency in labor use. Option D discusses relative production costs, but does not specifically highlight the efficiency aspect that justifies export decisions.