Comparative advantage is an economic advantage not consisting of higher quantity or quality in output, but of lower opportunity cost. Simply understood, the opportunity cost is that which is sacrificed when one makes a choice. If I spend an hour watching The Good Place, the opportunity cost is the hour I could have spent reading Enlightenment Now.

Comparative advantage is a crucial concept in international trade. A company in one country might not be better or faster at assembling a Playstation 5, but if the employees are not more valuable elsewhere the company has a comparative advantage. The more highly skilled human capital in the United States is better used in developing the software for the Playstation 5 rather than assembling the consoles. Therefore the Vietnamese workers have a comparative advantage; it is better from the economy’s point of view if those workers are the ones engaged in the assembly.