Comparative advantage — Social Studies definition
Producing a good at lower opportunity cost.
Where it is taught
- Trade, Comparative Advantage & Uneven Adjustment — Global Connections, Risk & Economic Inquiry, Government, Civic Participation & Economics, Grade 12
In use
Absolute advantage concerns using fewer inputs for a specified output; comparative advantage concerns lower opportunity cost.
Trade, Comparative Advantage & Uneven Adjustment
Questions using comparative advantage
Problem 1
Why can A have absolute advantage in both goods without comparative advantage in both?
Answer and explanation
Absolute advantage compares input requirements directly. Comparative advantage compares opportunity-cost ratios. A’s cloth cost is lower, while B’s grain cost is lower. Relative tradeoffs can differ even when A is faster at every task.