What is the meaning of comparative advantage?
Comparative advantage is elementary to international trade relations. The ability of a nation to produce any commodity at a lesser opportunity cost than its competitors is known as comparative advantage. It is basically a law in economics which refers to the ability of any economic participant to be able to produce various goods at relatively low opportunity costs than other actors.
It thus acts as a fundamental principle of international trade. It is generally in contrast to the absolute advantage which refers to the potential of making better goods and services than others.
The law of comparative advantage has been attributed to English political economist David Ricardo. It was stated in his book titled, “Principles of Political Economy and Taxation”.