Bethopedia

Example

Fred has the absolute advantage with each, but he should not do both, as collecting firewood costs him 2 shoes, but only costs George 1 (who hence has the comparative advantage). However Fred has both the absolute and comparative advantage when it comes to shoe repairs, as he loses only 1/2 his firewood, whereas George loses 1.

Comparative Advantage Sources: (These change over time)

• Individually: talent, education, training, background, etc
• Nationally: natural resources, infrastructure, culture etc