Comparative advantage is found by comparing the relative costs of production in each country.

Question

Quizplus · Accepted Answer

Comparative advantage theory is based on the principle of relative costs, which compares the opportunity costs of producing a good or service between two countries. This allows each country to specialize in producing the goods and services that they can produce more efficiently, resulting in increased overall efficiency and economic welfare.

Comparative Advantage Is Found by Comparing the Relative Costs of Production