Comparative advantage is the ability of an economy to produce a particular good or service at a lower opportunity cost than its trading counterparts. The theory of comparative advantage introduces opportunity cost as an analytic factor in choosing between different production alternatives.
comparative advantage, economic theory, was first developed by 19th-century British economist David Ricardo, who attributed the causes and benefits of international trade to differences in the relative opportunity cost (cost per other abandoned good) of producing the same good across countries.
The advantage of comparative advantage is the ability to produce a good or service at a lower opportunity cost. A comparative advantage gives companies the ability to sell goods and services at lower prices than their competitors, resulting in higher profit margins and greater profits.
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