Comparative Advantage
Comparative advantage exists when a producer can make a good at lower opportunity cost than others. It differs from absolute advantage (ability to produce more with same resources). Countries and individuals benefit from specialising in goods where they have comparative advantage and trading for others.
Real World
Bangladesh specialises in garment manufacturing not because it is the world's best producer, but because its opportunity cost of making clothes is lower than producing high-tech goods, giving it comparative advantage over Germany.
Exam Focus
Always discuss opportunity cost, not absolute output — confusing comparative with absolute advantage is a common error.
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