📚 Learning Guide
Absolute and Comparative Advantage
hard

Absolute advantage is to resource 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
Explore Topic

Choose the Best Answer

A

opportunity cost

B

total production

C

market demand

D

technology level

Understanding the Answer

Let's break down why this is correct

Answer

Comparative advantage is related to opportunity cost, which is the cost of what you give up to do something else. While absolute advantage focuses on who can produce more of a good with the same resources, comparative advantage looks at who can produce a good at a lower opportunity cost. For example, if one country can make both cars and computers more efficiently than another country, it has an absolute advantage in both. However, if that country is much better at making cars than computers, it should focus on cars, allowing the other country to specialize in computers if it has a lower opportunity cost for that. This way, both countries can trade and benefit from their specializations, leading to greater overall efficiency.

Detailed Explanation

Comparative advantage means focusing on what you do best compared to others. Other options are incorrect because Some might think total production is the same as comparative advantage; Market demand refers to how much people want something.

Key Concepts

Absolute Advantage
Comparative Advantage
Opportunity Cost
Topic

Absolute and Comparative Advantage

Difficulty

hard level question

Cognitive Level

understand

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