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Absolute advantage is when a producer can produce a good using less resources than their competitor(s), whereas comparative advantage is when a producer does not hold the absolute advantage but their ratio in producing a good is smaller.
Example:
Brian can type 30 words per minute and iron 10 shirts per house.
John can type 15 words per minute and iron 8 shirts per hour.
Though Brian has the absolute advantage in ironing, John has the comparative advantage.
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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.
Difference between absolute cost advantage theory and comparative cost advantage theory?
absolute cost advantage talks about the efficiency and cheaply a country incure in the production of goods and services against other country whiles comparative advantage talks about the opotunity cost of goods
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.
What are the principles of comparative and absolute advantage and their relevance in the development of third world countries?
what is the difference between capital and current expenditure what is the difference between capital and current expenditure
Can there be trade between two nation even if one has absolute disadvantage?
Yes, and not only that, but such trade can be profitable for both countries due to comparative advantage.
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.
Difference between absolute cost advantage theory and comparative cost advantage theory?
absolute cost advantage talks about the efficiency and cheaply a country incure in the production of goods and services against other country whiles comparative advantage talks about the opotunity cost of goods
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.
What are the principles of comparative and absolute advantage and their relevance in the development of third world countries?
what is the difference between capital and current expenditure what is the difference between capital and current expenditure
Can there be trade between two nation even if one has absolute disadvantage?
Yes, and not only that, but such trade can be profitable for both countries due to comparative advantage.
Differences between absulate advantage and comparetive advantage?
According to the definition I found, comparative advantage means being able to produce a product at a lower cost than others and absolute advantage means being the best at something or producing the best product.
What is the difference between theory of absolute advantage and a theory of comparative advantage?
The theory of absolute advantage states that a country should produce goods that it can produce more efficiently than other countries. On the other hand, the theory of comparative advantage argues that a country should specialize in producing goods that it can produce at a lower opportunity cost compared to other countries, even if it does not have an absolute advantage in that good.
When is trade mutually beneficial for two countries?
comparative advantage between two countries
What is the Difference between competitive and comparative advantage?
Competitive advantage: ability to produce a unit for strictly less cost than someone else. Comparative advantage: ability produce a unit for less opportunity cost than someone else.
What is David Ricardo's comparative cost theory of international trade?
The theory states that even if a country can produce both commodities more than the other there is still the need to specialze in the production of a particular commodity of which she has the lowest cost advantage and exchange it for the other, for trade between countries to be mutually benefitial."all things being equal".ASSUMPTIONS:1- there are only two countries in the world.2- there are only two commodities.3- trade between two nations are not restricted.by; ICE
What is the absolute advantage of trade in Philippine economy?
An absolute advantage is when trading only occurs between one or two parties. This is common in the Philippine economy since most industries are monopolistic.
On which factor does the comparative advantage theory depend?
Absolute Advantge: For example if one unit of labor in Scotland can produce 80 units of wool or 20 units of wine; while in Spain one unit of labor makes 50 units of wool or 75 units of wine, then Scotland has an absolute advantage in producing wool and Spain has an absolute advantage in producing wine. Comparative Advantage: Two men live alone in an isolated island. To survive they must undertake a few basic economic activities like water carrying, fishing, cooking and shelter construction and maintenance. The first man is young, strong, and educated and is faster, better, more productive at everything. He has an absolute advantage in all activities. The second man is old, weak, and uneducated. He has an absolute disadvantage in all economic activities. In some activities the difference between the two is great; in others it is small. Is it in the interest of either of them to work in isolation? No, specialization and exchange (trade) can benefit both of them. How should they divide the work? According to comparative, not absolute advantage: the young man must spend more time on the tasks in which he is much better and the old man must concentrate on the tasks in which he is only a little worse. Such an arrangement will increase total production and/or reduce total labour. It will make both of them richer.
