comparative advantage

Law of international trade first elaborated by English economist David Ricardo showing that trade becomes worthwhile if the cost of production of particular items differs between one country and another.

For example, if France can produce cheese at a cost of 100 units and milk at a cost of 300 units whereas Spain can produce cheese at 200 units and milk at 400 units, then France has an absolute advantage in the production of both cheese and milk because it can produce both more cheaply in absolute cost terms. However, it will still be advantageous for France to trade with Spain because in France milk is more expensive relative to cheese (milk costs three times more to produce than cheese) than in Spain (where milk costs only twice as much). So France would specialize in the production of cheese and Spain in the production of milk and they would trade.