Economics Comparative Advantage Questions
Comparative advantage in economics refers to the ability of a country, individual, or firm to produce a particular good or service at a lower opportunity cost compared to others. It is based on the concept of specialization, where entities focus on producing goods or services that they can produce more efficiently or at a lower cost, and then trade with others for goods or services that they cannot produce as efficiently. By specializing in the production of goods or services in which they have a comparative advantage, entities can maximize their overall production and consumption levels, leading to increased economic efficiency and welfare.