Comparative Advantage Explained With an Illustration

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Comparative Advantage Explained With an Illustration

Comparative Advantage Explained With an Illustration

Using currency to express the price of a specific item simplifies all calculations. If Country A mnufactures a car at a cost of $10,000, and Country B makes the same car for $5,000, it is obvious that the price of the car in Country B is likely to be cheaper, and that Country B has a comparative advantage over Country A in terms of producing cars.

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