Maximization of total output: Specialization maximizes the total output. By concentrating on the production of goods in which a party has a comparative advantage, it can produce more goods than...... Read More
Author: fin22
It increases efficiency. Countries, companies, or individuals can concentrate on goods for which they are most efficient, thus getting the most from their resources. It thus leads to more production...... Read More
Even if a country is less efficient at producing both goods, it can still benefit from trade. For instance, if one country is much better at producing one good and...... Read More
By specializing and trading based on comparative advantage, each producer increases his total output. This maximizes the total amount of goods available in the economy and improves living standards for...... Read More
Specialization of countries or individuals on the basis of their comparative advantage can help in the better allocation of resources. For example, if one country is relatively better at producing...... Read More
Why is Comparative Advantage Important? The principle of comparative advantage explains why specialization and trade lead to a more efficient allocation of resources and higher global welfare. There are several...... Read More