Economics Comparative Advantage Questions
Comparative advantage affects domestic industries by allowing them to specialize in the production of goods and services in which they have a lower opportunity cost compared to other countries. This specialization leads to increased efficiency and productivity, as domestic industries can focus on producing goods and services in which they have a comparative advantage. As a result, domestic industries can compete more effectively in the global market, leading to increased exports and economic growth. However, comparative advantage can also lead to the decline or restructuring of domestic industries that are less competitive in the global market, as resources are reallocated to more efficient sectors.