Comparative advantage arises from:

Question

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Comparative advantage is the ability of a country or firm to produce a particular good or service at a lower opportunity cost than others. This advantage arises from differences in climate, factor endowments, and technology between countries. Absolute advantage, which is the ability to produce more of a particular good or service than others, is not necessary for comparative advantage to exist. Autarkic behavior, which involves a country being self-sufficient and not engaging in trade with other countries, is not conducive to comparative advantage. While emphasizing export production can lead to increased specialization and potentially comparative advantage, it is not a necessary condition for it to exist.

Comparative Advantage Arises From