Comparative advantage - international trade theory.
Comparative advantage is a principle developed by David Ricardo in the early 19th century to explain the benefits of mutual trade (Carbaugh, 2008). Many underlying assumptions of comparative advantage depend on states of economic equilibrium and an absence of economy of scale.Comparative advantage is a term associated with 19th Century English economist David Ricardo. Ricardo considered what goods and services countries should produce, and suggested that they should specialise by allocating their scarce resources to produce goods and services for which they have a comparative cost advantage.Comparative advantage is often a self-reinforcing process Entrepreneurs in a country develop a new comparative advantage in a product either because they find ways of producing it more efficiently or they create a genuinely new product that finds a growing demand in home and international markets.
Definition of comparative advantage Comparative advantage occurs when one country can produce a good or service at a lower opportunity cost than another. This means a country can produce a good relatively cheaper than other countries.Comparative Advantage Essay Comparative advantage can be defined as the efficiency of a country or a state to produce a certain commodity at a lower opportunity cost compared to another another country. This applies to international trade where a country can produce a certain good or service at a cheaper cost than another nation.
Comparative means the one aimed to measure or judge subjects based on their similarities and differences to each other. Therefore, a comparative essay is an essay that usually needs the author to compare two subjects that have some relation in terms of similarities and differences.
