Final answer:
A country has a comparative advantage when it specializes in manufacturing products that it can supply more efficiently or at a lower cost compared to other goods. Specialization based on comparative advantage allows countries to gain from trade, benefiting from increased consumption and variety.
Step-by-step explanation:
When a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items, the country has a comparative advantage. This economic concept is crucial in understanding international trade dynamics. A country gains a comparative advantage when it can produce a good at a lower opportunity cost in terms of other goods, meaning it sacrifices less to produce that good than another country would. Through specialization based on this principle, countries can gain from trade, by consuming more than they could individually produce without it.
An example of comparative advantage is when one country can grow tropical fruits more efficiently due to its climate, while another country might efficiently produce technology because of a skilled workforce and resources. They trade to mutual benefit, focusing on their sectors of efficiency. This specialization leads to gains for both countries as they can enjoy a variety of goods at lower costs and higher quantities than if they were self-sufficient.