📚 Learning Guide
Absolute and Comparative Advantage
easy

Absolute advantage in economic terms is to production efficiency as comparative advantage is to:

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

Opportunity cost

B

Trade barriers

C

Consumption patterns

D

Market saturation

Understanding the Answer

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Answer

Absolute advantage in economic terms refers to a situation where a person or country can produce more of a good or service with the same amount of resources compared to others. In contrast, comparative advantage relates to the ability to produce a good or service at a lower opportunity cost than someone else. This means that even if one person or country is better at producing everything, they should still focus on what they do best and trade for other goods. For example, if Country A can produce both cars and computers more efficiently than Country B, but it has a much lower opportunity cost for cars, it should specialize in cars and trade with Country B for computers. This way, both can benefit from trade and improve their overall efficiency.

Detailed Explanation

Comparative advantage is about making choices. Other options are incorrect because Some might think comparative advantage is about limits on trade; People may confuse consumption with production choices.

Key Concepts

Absolute Advantage
Comparative Advantage
Opportunity Cost
Topic

Absolute and Comparative Advantage

Difficulty

easy level question

Cognitive Level

understand

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