Answer to Question #293095 in Management for jean

Question

Give your insight regarding the concept of comparative advantage.

Answer 1

Comparative advantage is the ability of a company to produce goods at a lower opportunity cost as compared to other companies.

For example, Denmark produces 25 million tons of black tea and 10 million tons of coffee each year, while Switzerland produces 15 million tons of black tea and 2.5 million tons of coffee during the same time period. Denmark has a comparative advantage in producing black tea.