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.]

CR
Answered by Callum R. Economics tutor

2021 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

In an economy consumption=50, investment=60, government spending=160, imports=60 and exports=40. What is the aggregate demand of the economy


What are the conditions of perfect competition?


Explain a policy that may reduce inequality in the United Kingdom


Evaluate whether growing market concentration and monopoly power is necessarily undesirable.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning