What is comparative advantage, and why is it important in international trade? Use a real example.
Answer (1)
Comparative advantage is when a country produces a good at a lower opportunity cost than another. It allows countries to specialize in what they do best and trade for the rest. For example, the Philippines specializes in overseas work (OFWs) and BPO services because we have a skilled workforce that speaks English, while Japan specializes in making cars. It would cost the Philippines too much to make its own cars, so it's better to trade. This system increases total production and makes products more affordable for everyone.
