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Comparative Advantage

Definition of 'Comparative Advantage'

A firm or country has a comparative advantage in the production of good X in the opportunity cost of producing a unit of X, in terms of other goods foregone, is lower, in that country compared with another country, or in that firm compared with another firm.

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Related Terms

Comparative Costs Absolute Advantage Life Cycle Stage of Value Creation NAL Comparative Static Analysis Comparative Statics Arbitrageur Indexation Just-in-Time Stock Holding Net Advantage of a Lease Sole Proprietor Strategy Planes Chart Value Drivers

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