comparative advantage

Definition

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.

Use this term in a sentence

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

​ Was this Helpful? YES  NO 6 people found this helpful.

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.

​ Was this Helpful? YES  NO 10 people found this helpful.

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.

​ Was this Helpful? YES  NO 6 people found this helpful.

Show more usage examples...

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Heckscher-Ohlin Model export promotion