What is meant by comparative advantage in trade?

Comparative advantage is where countries stick to what they are best at producing and trade those goods with each other. It does not matter if one country is worse at making, say, bread, than the country it is trading with - but that if bread is what it is good at producing then it should make this and trade its bread abroad. Likewise, the other country should produce only what it is best at producing. [This can be shown through a diagram with two countries producing two goods. To demonstrate this, I will require the whiteboard feature.]

Answered by Callum R. Economics tutor

1576 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Discuss the likely impact of a depreciation of the pound on the UK's economy.


What is a possible result of a reduction in the budget deficit on the circular flow of income?


explain the effect of a rise in government expenditure in the AD-AS framework


What is the difference between law of diminishing returns to a factor and decreasing returns to scale?


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo
Cookie Preferences