What describes a country's ability to produce a good at a lower opportunity cost than another country?

The concept that best describes a country's ability to produce a good at a lower opportunity cost than another country is known as comparative advantage. This principle emphasizes that even if one country is more efficient in producing everything (meaning it has an absolute advantage), it can still benefit from trade by specializing in the goods where it has the lowest opportunity cost compared to other countries.

For instance, if Country A is highly efficient at producing both cars and textiles but sacrifices fewer alternative goods to produce textiles, while Country B has a lower overall production efficiency but sacrifices less to produce cars, Country A should specialize in textiles and Country B in cars. They can then trade to benefit both, maximizing overall economic efficiency.

On the other hand, absolute advantage refers to the ability of a country to produce more of a good with the same resources than another country, which does not take opportunity costs into account. Free trade pertains to the unrestricted exchange of goods and services between countries, and a tariff is a tax imposed on imported goods to protect domestic industries or generate revenue but does not relate directly to the production capabilities of countries in terms of opportunity cost. Therefore, comparative advantage is the correct concept that encapsulates the scenario described in the question.