Individuals A and B can both produce good X.We say that A has a comparative advantage in the production of good X if

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Comparative advantage is based on opportunity cost, which is the value of the next best alternative forgone. If A has a lower opportunity cost of producing good X than B, it means that for A, the cost of producing X is relatively lower compared to the cost of producing other goods or services that A could choose to produce instead. Therefore, A can produce X more efficiently than B and has a comparative advantage in the production of good X.

Individuals a and B Can Both Produce Good X