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comparative advantage

A Dictionary of Economics

Nigar Hashimzade,

Gareth Myles,

John Black

comparative advantage 

A country is said to have a comparative advantage in production of a good if it has lower opportunity cost in producing this good compared to another country or the rest of the world. If countries specialize in the production of those goods in which they have a comparative advantage then free trade improves production and consumption efficiency by increasing aggregate output with the same amount of resources and expanding the choice for consumers. See also absolute advantage.