Comparative Advantage is an economic concept that explains how countries can benefit from specializing in the production of certain goods and services and trading with other countries. It states that countries should focus on producing goods and services that they have a natural advantage in producing, such as those that require fewer resources or
Comparative advantage is the circumstance or opportunity of welfare improvement afforded by allocating one's labor and other resources amongst one's available opportunities. The allocation is generally performed in the context of trade opportunities and realizable prices. When re-allocation occurs prices usually change. The optimal allocation is not necessarily extreme specialization that excludes all but one productive activity. Comparative advantage is distinct from competitive advantage and absolute advantage.