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Economics
Comparative Advantage
The ability of a country or person to produce a good at a lower opportunity cost than another.
Comparative advantage is the foundation of free trade theory. It explains why countries trade even when one is more productive in every industry. It was first explained by David Ricardo in 1817 and still guides global economics today.
It's why you hire a plumber even if you know how to fix pipes — they do it faster and cheaper than you can.
Real world: Portugal can produce wine more efficiently than England, while England can produce cloth more efficiently. Both countries benefit by specialising and trading, even if one is better at everything.
💡 Comparative advantage is why specialising and trading makes everyone richer.