Question

How does the concept of comparative advantage relate to the notion that "people face tradeoffs" ?

Answer 1

A country has comparative advantage in the production of that good in which it has lower opportunity cost.

The opportunity costs can be defined as the lost units of output of other goods for producing an additional unit of output of a good.

Since case of opportunity cost for producing an additional unit of good A, the economy need to sacrifice some units of good B. This is because the resources are limited in the economy. Hence without sacrificing the production of Good B, the additional unit of the good A cannot be produced.

Hence there is trade off in case of comparative advantage because a country has comparative advantage in the production of that good in which it has lower opportunity cost.

This is the reason why the concept of comparative advantage relate to the notion that "people face tradeoffs"