ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economic terms, a country has a comparative advantage when it can produce at a lower opportunity cost than that of trade partners. While a country cannot have a comparative advantage in all goods and services, it can have an absolute advantage in producing all goods.

Detailed explanation-2: -We’ll say that country A has an absolute advantage in the production of a good over country B if it can produce more of that good than country B using the same resources. Country A has a comparative advantage in producing the good if it can produce the good at a lower opportunity cost than country B.

Detailed explanation-3: -If a country has a comparative advantage in the production of a good, then that country has a lower opportunity cost in the production of that good. By definition comparative advantage means you can produce a good at a lower opportunity cost than other countries.

Detailed explanation-4: -A producer has a comparative advantage in the production of a good or service when that producer can produce the good or service with a lower opportunity cost. An absolute advantage in production means that you can produce a product with fewer resources than someone else can.

Detailed explanation-5: -Comparative advantage is the ability of a country to produce a good or service for a lower opportunity cost than other countries. This economic theory was developed by David Ricardo. It was originally applied to international trade, but it can be applied to any level of business.