Next video:
Loading the player...

Comparative advantage is the ability of an individual, company or country to produce a good or service at a lower opportunity cost than its competitor. Having a comparative advantage doesn’t mean that one entity is better than another at producing a good or service. It means that it sacrifices less to do so.

Related Articles
  1. Insights

    Basic Concept Of Absolute Advantage

    Absolute advantage is the ability of an individual, country or company to produce a good or service at a lower cost than any competitor. An entity with an absolute advantage requires fewer inputs ...
  2. Insights

    What Is International Trade?

    Everyone's talking about globalization, so we explain what is it and why some oppose it.
  3. Small Business

    Capital Expenditures (CAPEX)

    Learn more about what it costs to produce goods.
  4. Small Business

    3 Secrets Of Successful Companies

    Make smart investments by spotting up-and-coming success stories early.
  5. Small Business

    How Can Companies Increase Market Share?

    Companies that increase their market share enjoy a competitive advantage. They receive better prices from suppliers, and they’re able to produce goods faster.
  6. Investing

    What Is The Difference Between Comparative Advantage And Absolute Advantage?

    When a nation can make a product at a higher quality and faster rate than another, it has an absolute advantage.
  7. Investing

    Understanding First Mover Advantage

    Someone has to be first into a market. Find out when this can be an advantage for a company (and when it's not).
  8. Financial Advisor

    Which Economy Is Larger - The United States or China?

    China's economy may be larger than the U.S. economy, but it all depends on which exchange rate method you use to make the GDP comparisons.
  9. Insights

    Economic Growth

    Economic growth happens when the market value of the goods and services in an economy increase in one time period as compared to a prior time period.
Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an ...
  3. Salvage Value

    The estimated value that an asset will realize upon its sale at the end of its useful life. The value is used in accounting ...
  4. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  5. Promissory Note

    A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center