What is an example that illustrates the difference between comparative advantage and absolute advantage in international trade?

Answer 1

An example that illustrates the difference between comparative advantage and absolute advantage in international trade is the scenario where Country A can produce both cars and computers more efficiently than Country B. However, Country A has a comparative advantage in producing cars, while Country B has a comparative advantage in producing computers. This means that even though Country A has an absolute advantage in both products, it is more beneficial for both countries to specialize in the product they can produce most efficiently and trade with each other.