Overview
Comparative advantage is a fundamental concept in economics that explains how individuals and countries can benefit from trade by specializing in the production of goods where they have a lower opportunity cost. By focusing on what they do best, they can trade with others to obtain goods more effici...
Key Terms
Example: Country A can produce wine more efficiently than cheese, while Country B can produce cheese more efficiently than wine.
Example: If you spend time studying economics, the opportunity cost is the time you could have spent studying biology.
Example: A factory that only produces bicycles rather than a variety of products.
Example: A PPF showing the trade-off between producing cars and computers.
Example: Countries trading oil for technology.
Example: Using fewer resources to produce the same amount of goods.