Explain the concept of comparative advantage.

Explain the concept of comparative advantage.

The concept of comparative advantage 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 principle that even if a country or individual is less efficient in producing all goods or services, they can still benefit from specializing in and exporting the goods or services they can produce at a lower opportunity cost. By specializing in their comparative advantage, countries can engage in international trade and mutually benefit from exchanging goods and services with other countries. This concept is a key driver of globalization and trade liberalization, as it promotes efficiency, specialization, and economic growth.