Economics Comparative Advantage Questions
The relationship between comparative advantage and economic efficiency is that comparative advantage leads to increased economic efficiency. Comparative advantage refers to a situation where a country or individual can produce a good or service at a lower opportunity cost compared to others. By specializing in the production of goods or services in which they have a comparative advantage, countries can allocate their resources more efficiently. This leads to increased productivity, higher output, and overall economic efficiency. Additionally, countries can benefit from international trade by focusing on producing goods or services in which they have a comparative advantage, allowing them to trade with other countries and access a wider variety of goods and services at lower costs.