Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Opportunity cost
B
Trade barriers
C
Consumption patterns
D
Market saturation
Understanding the Answer
Let's break down why this is correct
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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