What is the key focus of Comparative Advantage?

The key focus of Comparative Advantage is on relative advantages in economic activities. This principle posits that countries or entities should specialize in producing goods or services for which they have a lower opportunity cost compared to others. Essentially, even if one country is less efficient at producing all goods compared to another, it can still benefit from trade by focusing on the production of those goods for which it is relatively better suited.

In practical terms, this means that by specializing and trading, countries can achieve a more efficient allocation of resources, leading to increased overall production and economic growth. The concept encourages global trade by suggesting that there are benefits for all parties involved when they focus on their strengths and trade for other goods and services.

The other options represent concepts that do not align with the foundational principles of Comparative Advantage. For instance, absolute production capacity refers to the total output capability of a country regardless of its relative efficiency in producing specific goods, which is not the focus of Comparative Advantage. Market monopolization involves dominating a market to control prices and eliminate competition, which runs counter to the principles of free trade fostered by Comparative Advantage. Lastly, government intervention refers to the active involvement of governments in the market, which can sometimes distort the free trading mechanisms that Comparative Advantage relies upon.