What defines comparative advantage in production?

Comparative advantage in production refers to the ability of a producer to produce a good or service at a lower opportunity cost compared to another producer. This fundamental economic principle highlights that even if one producer is more efficient in producing all goods, there are still benefits to specialization and trade based on opportunity costs.

For instance, if two countries can both produce cars and computers, but one country has a much lower opportunity cost for producing cars over computers, it would make sense for that country to specialize in car production, while the other, which has a lower opportunity cost for computers, focuses on producing computers. This specialization leads to more efficient overall production and allows both parties to benefit from trade.

The other options provided do not accurately define comparative advantage. Having a higher output suggests only absolute advantage, which doesn't consider the relative efficiencies of opportunity costs. Producing more goods at a higher cost contradicts the concept of efficient resource allocation, and possessing greater resources does not inherently equate to having a comparative advantage unless those resources lead to lower opportunity costs.