Comparative Advantage
Plain definition
The ability of a country, firm, or person to produce a good at a lower opportunity cost than a trading partner. Comparative advantage, not absolute superiority, is what makes trade mutually beneficial: each party specializes where its relative disadvantage is smallest.
In economics
Ricardo's insight drives modern trade theory: even if one country is better at producing everything (absolute advantage), both countries gain if each specializes in goods where its opportunity cost is lowest and trades for the rest. Opportunity cost is measured as the amount of one good sacrificed to make another.
Example
Suppose the US gives up 2 cars to make 1 ton of wheat, while Brazil gives up 1 car per ton of wheat. Brazil's opportunity cost of wheat is lower, so Brazil has the comparative advantage in wheat even if the US is more productive in absolute terms.
Students often confuse comparative advantage with absolute advantage. A country can be worse at making everything yet still benefit from trade -- comparative advantage depends on relative opportunity costs, not on who is absolutely more productive.