Comparative advantage

Lower relative opportunity cost in producing a good

Comparative advantage is an economic principle that explains why people, firms, and countries can often benefit from trade even when one party is more productive at producing every good or service. The principle states that greater gains from trade arise when each participant devotes a larger share of its labor and other productive resources to the activities with the lowest opportunity cost and obtains other goods and services through trade. Comparative advantage differs from absolute advantage, which concerns being more productive overall, and competitive advantage, which concerns outperforming rivals in a marketplace.

From Wikipedia, under CC BY-SA. More on occurri.