ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Comparative advantage is an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners. Comparative advantage is used to explain why companies, countries, or individuals can benefit from trade.

Detailed explanation-2: -Comparative Advantage: The ability of an actor to produce a good or service for a lower opportunity cost than a competitor.

Detailed explanation-3: -A comparative advantage exists when a country can produce goods at a lower opportunity cost compared to other countries.

Detailed explanation-4: -The ability to produce a good at a lower opportunity cost is called “Comparative Advantage”. Ricardo demonstrated that comparative advantage is more important in determining the benefits of trade than which country can produce more of a good (called “Absolute Advantage”).

Detailed explanation-5: -The benefit of comparative advantage is the ability to produce a good or service for a lower opportunity cost. A comparative advantage gives companies the ability to sell goods and services at lower prices than their competitors, gaining stronger sales margins and greater profitability.