Absolute advantage
- individual- exists when a person can produce more of a certain good/ service than someone else in the same amount of time.
- national- exists when a country can produce more of a good/service than another country can in the same time period.
- a person or a nation has a comparative advantage in the production of a product when to can produce the product ONLY when lower domestic opportunity cost than can a trading partner.
- EX. output- tons per acre, miles per gallon, words per minute, tv's produced per hour.
- EX. input- number of hours to do a job, numbers of acres to feed a horse, number of gallons of paint to paint a house.
- Gains from trade are based on comparative advantage, not absolute advantage.
Thank you for the graphs of absolute advantage it's helps me understand better. don't forget to emphasize that the LOWER domestic opportunity cost has the comparative advantage
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