Explain what is a comparative advantage, in Economics.?

Answer 1

A country has a comparative advantage when that country can produce a thing at a lower opportunity cost versus another country.

Example:

It takes 2 hours for the United States to build a computer and 6 hours to make a shirt.

and

It takes 2 hours for India to make a shirt and 6 hours to build a computer.

The opportunity cost for India to make shirts is less than the United States because it takes India less time to make them. The United States could build 3 computers in the time it takes them to make 1 shirt, while India could only build 1/3 of a computer in the time it takes them (India) to make a shirt.

Cost (in terms of $$) isnt a factor in comparative advantage. A country doesnt really have the comparative advantage just because they could produce something at a lower price.

Answer 2

For example

Making Textiles in india is cheaper than in the USA

Therefore india has a comparative advantage over the US

This is why alot of things are made in china and india and exported to countries where labour is much cheaper

Answer 3

Comparative advantage is when the inputs (resources, labor, etc.) are less costly in an area or country so they can make more and make it cheaper than another area or country. Then they can sell it cheaper and have an advantage in the market.

Best Wishes,

Sue