Comparative Advantage

Comparative Advantage Meaning:
The idea in economics that one party (whether a person, business, country or any other actor) will always be able to produce at least one thing or perform at least one task at a lower opportunity cost than another.

Comparative Advantage Example:
One party can have a comparative advantage in producing something or performing some task compared with another party even if the second party can produce or do it at a lower absolute cost. Assume Lance Armstrong is the best cyclist AND the best typist in the world. He’s still better off employing someone else to do his typing (someone worse than he is at it), as typing doesn’t pay very well and he can make a lot more money devoting all of his time to cycling. The person he employs to type for him therefore has a comparative advantage at typing, even though his or her absolute cost is higher.