[This is part of the series: The Complete Guide To Economics 101.]
What is comparative advantage in economics?
Comparative Advantage compares opportunity cost among producers asking: Who has to give up the least in order to produce X or Y?
Absolute advantage, however, compares the output of someone, or some group, to another.
Examples of comparative advantage include:
- A certain CEO might type faster than his secretary. But what does the CEO have to give up in order to spend his day typing?
- A brain surgeon might have a very high opportunity cost of using a wood saw. What does a surgeon give up if they permanently hurt their hand?
- What state has a comparative advantage in growing oranges? Florida? Or, Texas?
- What country has a comparative advantage in growing tobacco? Cuba? Or, Saudi Arabia?