Complementary Advantage
Definition
A complementary advantage occurs when two regions, through trade, can specifically satisfy each other's demands.
Analogy
Think of it like a potluck dinner. You're really good at making lasagna and your friend is great at baking apple pie. Instead of both of you trying to make both dishes, you focus on the lasagna and your friend focuses on the apple pie. This way, everyone gets to enjoy both dishes without doubling the effort.
Related terms
Absolute Advantage: This refers to the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group.
Comparative Advantage: This is an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners.
Trade Deficit: This happens when a country imports more goods and services than it exports.
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