Economics Balance Of Trade Questions
Absolute advantage refers to a situation where a country can produce a good or service more efficiently and with fewer resources than another country. It is based on the country's ability to produce a higher quantity of a good or service using the same amount of resources.
Comparative advantage, on the other hand, refers to a situation where a country can produce a good or service at a lower opportunity cost compared to another country. It is based on the country's ability to produce a good or service at a lower relative cost, even if it may not have an absolute advantage in producing that good or service.
In summary, absolute advantage focuses on the ability to produce more efficiently, while comparative advantage focuses on the ability to produce at a lower opportunity cost.