comparative advantage


The name for the ability of one business entity to engage in production at a lower opportunity cost than another entity. Comparative advantage, rather than absolute advantage, is useful in determining what should be produced and what should be acquired though trade.

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Since they were able to get the materials at a much lower price than their competitors, they were able to have a comparative advantage.

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Mr. Vai invested in the Idaho based luthier, expecting he'd have a comparative advantage with all the state's forests there, ripe for the cutting.

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Our company owned a very high producing iron ore mine in Minnesota and was able to use that comparative advantage to produce steel at a cheaper price than our competitors.

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