Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 3 - Part I - Interdependence and the Gains from Trade - Questions for Review: 2

Answer

Absolute advantage is the ability to produce a good using fewer inputs than another producer, while, comparative advantage is the ability to produce a good at a lower opportunity cost than another producer.

Work Step by Step

The easiest way to find the difference between absolute advantage and comparative advantage is to look at the producers and decide who can do more goods with fewer inputs, then, by comparing both producers and decide who give up less input you can tell who has a greater comparative advantage.
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