Comparative Advantage
Comparative advantage is a key concept in economics that explains how countries can benefit from specializing in the production of goods and services in which they have a lower opportunity cost. This allows for increased efficiency and overall economic growth through international trade.
For example, Country A may be able to produce both cars and computers, but it is more efficient at producing cars. Meanwhile, Country B is more efficient at producing computers. By specializing in the production of cars and trading with Country B for computers, both countries can benefit from lower costs and higher overall production levels.
By focusing on producing goods and services in which they have a comparative advantage, countries can maximize their resources and achieve higher levels of economic output. This concept is a fundamental principle in international trade and has been studied extensively by economists.
For more information on comparative advantage, you can visit the Wikipedia page.