Comparative advantage explains the benefits of trade from "summary" of The Economics Book by DK
Comparative advantage is a fundamental concept in economics that helps us understand why trade is beneficial for all parties involved. The idea is that countries should specialize in producing goods and services in which they have a lower opportunity cost. This means that they can produce these goods more efficiently than others. For example, imagine two countries, A and B, both producing two goods: cars and computers. Country A can produce 1 car in 10 hours and 1 computer in 5 hours, while Country B can produce 1 car in 8 hours and 1 computer in 4 hours. In this scenario, Country A has a comparative advantage in producing cars, while Country B has a comparative advantage in producing computers. I...
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