In the context of the Production Possibility Frontier (PPF) and global trade, what does India's comparative advantage typically refer to?

• A. Producing goods and services that require a large supply of skilled labor, such as information technology and software services
• B. Exporting primarily agricultural products due to vast arable land
• C. Specializing in high-cost luxury goods for niche markets
• D. Producing capital-intensive goods like advanced machinery and aerospace equipment

Answer: (A)

Verified step by step guidance

1. Understand the concept of comparative advantage: It refers to a country's ability to produce a good or service at a lower opportunity cost than other countries.
2. Identify the factors of production that India has in abundance or is relatively more efficient in using, such as a large supply of skilled labor.
3. Analyze the types of goods and services that align with India's factor endowments, focusing on those that require skilled labor, like information technology and software services.
4. Compare this with other options such as agricultural products, luxury goods, or capital-intensive goods, and evaluate which aligns best with India's comparative advantage based on opportunity costs and resource availability.
5. Conclude that India's comparative advantage typically lies in producing goods and services that require skilled labor, which is why it specializes in IT and software services in global trade.