Principles of Macroeconomics / Unit 17 MAC 1603 short lesson, about 20 seconds
Comparative Advantage
Captions available
The idea
A country has a comparative advantage in a good when it produces that good at a lower opportunity cost than its partner. The question is not what a country can make most of, but what it gives up to make it.
In practice
This is unit one's opportunity cost, applied between countries.
Where people slip
Comparative advantage, not absolute advantage, is what makes trade pay.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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