Comparative advantage illustrates that relative rather than absolute differences in productivity can form a determining basis for international trade.

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Comparative advantage suggests that countries should specialize in producing goods or services that they can produce more efficiently and at a lower opportunity cost than other countries. This means that even if one country is better at producing all goods, it can still benefit from trading with another country that has a comparative advantage in a particular area. Therefore, comparative advantage is based on relative, rather than absolute, productivity differences between countries.

Comparative Advantage Illustrates That Relative Rather Than Absolute Differences in Productivity