Comparative advantage is one of the core principles in economics that helps explain the basis for trade and specialization. It occurs when a party, whether an individual, business, or country, can produce a good or service at a lower opportunity cost than others. This principle is vital in showing that even though no country or individual can possess an absolute advantage in the production of any good, a country or individual may gain from trade by specializing in those activities for which it or he is relatively best.
1. Overview of Comparative Advantage
The concept of comparative advantage was discovered by British economist David Ricardo in 1817. He remains a central figure in modern trade theory. It basically revolves around the idea that a producer is not necessarily more efficient, given that both are producing two different goods, and there could be gains from trade, since they could specialize in that good which has a low opportunity cost for him to produce.

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