Comparative advantage

A country is said to have a comparative advantage in the production of a good or service if it can produce that good or service at a lower opportunity cost than another country. The "opportunity cost" of producing a particular good or service is defined as the amount of production of other goods and services that must be given up in order to produce one more unit of that good or service.

This concept should be distinguished from "absolute advantage," which reflects the quantity of productive resources that must be used, rather than what other goods or services must be given up by using those productive resources to make something else.