Economics Comparative Advantage Questions
Comparative advantage impacts resource allocation by guiding countries to specialize in producing goods and services in which they have a lower opportunity cost compared to other countries. This allows for more efficient allocation of resources as countries can focus on producing what they are relatively better at, leading to increased productivity and overall economic growth. Additionally, countries can engage in international trade based on their comparative advantage, allowing them to obtain goods and services that they are not efficient in producing domestically. This leads to a more optimal allocation of resources globally, benefiting all participating countries.