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

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