Ricardo's Theory of Comparative Advantage

Ricardo's Theory of Comparative Advantage suggests that countries benefit from trade by specializing in producing goods where they have a lower opportunity cost compared to others. This means a country should focus on producing what it can make most efficiently, while trading for products that other countries can produce more effectively. As a result, overall production and consumption increase, leading to greater economic benefits for all involved. Essentially, it’s about maximizing efficiency and making the best use of resources by focusing on strengths.