Comparative advantage will always occur when two parties have different opportunity costs in production.

Question

Quizplus · Accepted Answer

Comparative advantage exists when two parties have different opportunity costs in production. This means that one party can produce a good or service at a lower opportunity cost than the other party. It is this difference in opportunity costs that creates the potential for gains from trade as each party can specialize in producing the good or service that they have a comparative advantage in and trade with the other party.

Comparative Advantage Will Always Occur When Two Parties Have Different