Comparative Advantage

The ability of an economy to produce a specific good or service at a lower opportunity cost than its trading counterparts is known as comparative advantage. Comparative advantage allows a corporation to sell goods and services at a cheaper cost than its competitors while maintaining higher profit margins. One of the most essential notions in economic theory is comparative advantage, which is a central premise of the argument that all actors, at all times, can gain from cooperation and voluntary trade. It is also a fundamental principle in international trade theory.