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A country cannot gain from trade with another country if it has an absolute advantage for all the goods produced by the two countries?
Wiki User
∙ 14y ago
Nope. let us say US has abosulte adv in make whiskey and tv and uses 1 and 2 labor respectively to produce them. On the other hand UK uses 2 and 6 labor respectvely and so it does not have absolute adv in any of them. But relatively speaking, UK has relative advantage in making whiskey rather than TV. So, it will make whiskey whereas US will specialise in TV.
Wiki User
∙ 14y ago
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Difference between absolute advantage and comparative advantage?
There are many similarities and differences between Comparative Advantage and Absolute Advantage. Some simple differences between the two would be, comparative advantage uses the driving force of specialization. Another thing of comparative are, if one country has an absolute advantage or disadvantage in any kind of output, any of the other countries will maybe profit from majoring in and distributing those products. Absolute advantage has a country that economically has a benefit over another, in a precise moral, when it produces that moral at a lower cost. Also a country using the same contribution of properties a country with an absolute advantage will have superior productivity. A few modest similarities between comparative and absolute advantage are, both of these terms are two basic concepts to international trade. Additional details would be the two terms both produce a product more efficiently which gives them an absolute advantage.
How do absolute advantage and comparative advantage have in common?
Firstly absolute advantage is where a firm or producer can produce the good using less/fewer resources than another competitor, therefore the producer has the absolute advantage and is more economically efficent. Whereas Comparative advantage is where a firm can produce a good at a lower opportunity cost than another producer. So these to economic situations are very similar and are both about which producer is most economically efficent to produce certain goods, though they have one main thing in common. Knowing who has the absolute or the comparative advantage means the producers can use specialisation to esure the least resources are produced and the best firms who can produce the good the best are producing them.
What is the definition of absolute advantage?
Absolute advantage exists when one economic agent can strictly produce more than another agent in a given good or service. This is different from comparative advantage, which occurs when an economic agent can produce for a lower opportunity cost than another agent.
What is the ability of an entity to produce a good at an opportunity cost that is lower than that of another producer?
Comparative advantage :)
Difference between comparative cost advantage and absolute cost advantage?
Absolute advantage and comparative advantage are two basic concepts to international trade. Under absolute advantage, one country can produce more output per unit of productive input than another. With comparative advantage, if one country has an absolute (dis)advantage in every type of output, the other might benefit from specializing in and exporting those products, if any exist.A country has an absolute advantage economically over another, in a particular good, when it can produce that good at a lower cost. Using the same input of resources a country with an absolute advantage will have greater output. Assuming this one good is the only item in the market, beneficial trade is impossible. An absolute advantage is one where trade is not mutually beneficial, as opposed to a comparative advantage where trade is mutually beneficial.A country has a comparative advantage in the production of a good if it can produce that good at a lower opportunity cost relative to another country. The theory of comparative advantage explains why it can be beneficial for two parties (countries, regions, individuals and so on) to trade if one has a lower relative cost of producing some good. What matters is not the absolute cost of production but the opportunity cost, which measures how much production of one good, is reduced to produce one more unit of the other good.
Difference between absolute advantage and comparative advantage?
There are many similarities and differences between Comparative Advantage and Absolute Advantage. Some simple differences between the two would be, comparative advantage uses the driving force of specialization. Another thing of comparative are, if one country has an absolute advantage or disadvantage in any kind of output, any of the other countries will maybe profit from majoring in and distributing those products. Absolute advantage has a country that economically has a benefit over another, in a precise moral, when it produces that moral at a lower cost. Also a country using the same contribution of properties a country with an absolute advantage will have superior productivity. A few modest similarities between comparative and absolute advantage are, both of these terms are two basic concepts to international trade. Additional details would be the two terms both produce a product more efficiently which gives them an absolute advantage.
How do absolute advantage and comparative advantage have in common?
Firstly absolute advantage is where a firm or producer can produce the good using less/fewer resources than another competitor, therefore the producer has the absolute advantage and is more economically efficent. Whereas Comparative advantage is where a firm can produce a good at a lower opportunity cost than another producer. So these to economic situations are very similar and are both about which producer is most economically efficent to produce certain goods, though they have one main thing in common. Knowing who has the absolute or the comparative advantage means the producers can use specialisation to esure the least resources are produced and the best firms who can produce the good the best are producing them.
What is the definition of absolute advantage?
Absolute advantage exists when one economic agent can strictly produce more than another agent in a given good or service. This is different from comparative advantage, which occurs when an economic agent can produce for a lower opportunity cost than another agent.
What is the ability of an entity to produce a good at an opportunity cost that is lower than that of another producer?
Comparative advantage :)
Difference between comparative cost advantage and absolute cost advantage?
Absolute advantage and comparative advantage are two basic concepts to international trade. Under absolute advantage, one country can produce more output per unit of productive input than another. With comparative advantage, if one country has an absolute (dis)advantage in every type of output, the other might benefit from specializing in and exporting those products, if any exist.A country has an absolute advantage economically over another, in a particular good, when it can produce that good at a lower cost. Using the same input of resources a country with an absolute advantage will have greater output. Assuming this one good is the only item in the market, beneficial trade is impossible. An absolute advantage is one where trade is not mutually beneficial, as opposed to a comparative advantage where trade is mutually beneficial.A country has a comparative advantage in the production of a good if it can produce that good at a lower opportunity cost relative to another country. The theory of comparative advantage explains why it can be beneficial for two parties (countries, regions, individuals and so on) to trade if one has a lower relative cost of producing some good. What matters is not the absolute cost of production but the opportunity cost, which measures how much production of one good, is reduced to produce one more unit of the other good.
In which situation does one country have an absolute advantage over another country?
When its production costs are lower.
What refers to a country's ability to produce more of a given product than another country can?
absolute advantage
What are some advantages about monarchy?
One could argue that a clear line of succession is an advantage of a monarchy. From the perspective of the monarchy, absolute power would be another advantage.
Advantages and disadvantages of music?
An advantage of music is the beautiful sounds that are produced. Another advantage is the employment that music creates. A disadvantage of music is that the instruments are expensive.
What is foundation of human skills?
The foundation of human skill is based upon the insatiable and limitless wants and desires of people. If a person wants something (everyone experiences the phenomenon of desire), thay must work towards that achievement. This involves what economists refer to as "absolute advantage", or the ability of human capital and labor to produce goods and services at a cost. From absolute advantage, we derive "comparative advantage". Comparative advice describes the ability to produce goods and services at a cost less than that of another producer. For example, General Electric could have produced computers, but Apple was able to produce them at less cost. GE has absolute advantage, but Apple has compartative advantage. Producing computers is Apple's skill. The desire to "be better off" drives human skill, which can be can be highly specialized and ultimately successful.
When one country can produce a product more cheaply than another country. what can this be called?
When one country can produce a product more cheaply than another country this is called comparative advantage. When one country can produce more goods than another using an equal amount of resources, this is called absolute advantage.
What is Adam Smith's Absolute Advantage Theory?
The theory of "Absolute Advantage" is defined by the ability of a nation, business entity or persons to produce goods and services at much lower prices compared to that of their competitors or other entities. Any entity can also be considered to have absolute advantage in more than one product or service.
