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

1771 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What does the Price Elasticity of Demand measure? How is it calculated? And why is it important?


It is the oil price crash of 2014, and the Norwegian government is fearing a recession. What policies can be enacted to avoid a recession?


Why is the marginal cost curve shaped the way it is?


Explain how interest rates could be used to stimulate a rise in inflation.


We're here to help

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

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences