Absolute Advantage
- Individual- exists when a person can produce more of a certain good/service than someone else in the same amount of time or resources
- National- exists when a country can produce more a good/service than another country can in the same time period or using the same amount of resources
Comparative Advantage
- A person or a nation has a comparative advantage when it can produce the product at a lower domestic opportunity cost than can a trading partner.
Examples of output problems
1. meat produced in a day
2. video games produced in a year
Example of input problem
1. hours to make a video game
Specialization and trade
- Gains from trade are based on comparative advantage
- Country should import whichever product they do not have the advantage in producing
Great blog and well organized after reading your absolute advantage and comparaitive advantage now I see that absolute is about the amount of time it takes a person or country to produce a good or service while comparaitive is about a person or country choosing the better opportunity cost between weather to produce a good/service or trade for it from another.
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