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What generates comparative advantage? We look briefly at geography, factor proportions, increasing returns to scale and institutions such as labor market flexibility.
Comparative advantage explains why people trade and what goods they should trade. To illustrate the concept of comparative advantage, we ask: Should Martha Stewart iron her own shirts?
How to do Absolute and Comparative Advantage Explain Gains from Trade?
What can a small, isolated island economy teach the rest of the world about the nature and causes of the wealth of nations?
We take a look at our example which compares shirt and computer production and consumption in Mexico and the United States.
Quick recap on the main economic justifications/reasons for countries to trade with one another for greater economic prosperity.
A video outlining comparative advantage and how it compares to absolute advantage.