Comparative Advantage

Question 1

Definition of comparative advantage

Answer 1

Comparative advantage is the ability for a country, region or producer to produce a product at a lower opportunity cost than other areas.

Question 2

Comparative advantage example

Answer 2

Often hay
Japanese want ours cause they have a larger population which means there isn’t enough land to grow produce one.

Wheat and car production
Australia can produce wheat at a lower opportunity cost due to availability of land. Australia can produce cars but would be better off focusing on wheat as this will result in a higher opportunity cost than what China could produce them at.