In economics, the law of comparative advantage refers to the ability of a party (an individual, a firm, or
a country) to produce a particular good or service at a lower marginal cost and opportunity cost than
another party. It can be contrasted with absolute advantage which refers to the ability of a party to
produce a particular good at a lower absolute cost than another.
Comparative advantage explains how trade can create value for both parties even when one can
produce all goods with fewer resources than the other. The net benefits of such an outcome are called
gains from trade.