Country A produces 100 units of rice per acre of farmland and Country B produces 70 units of rice per acre of farmland using the same resources.
The theory of comparative advantage introduces opportunity costs as an analysis factor in choosing between different production options.
Comparative advantages include producing more goods at a lower cost than our trading partners, lowering prices, and making more profits from it.
In the last option, we see higher productivity in Country A compared to country B, both of which are under the same conditions.
Therefore, it is easy to see that Country A is profitable when trading in the international market. Thus, Country A has a comparative advantage over country B.
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