Friday, May 1, 2015

Absolute Advantage vs. Comparative Advantage

Absolute Advantage

  • Individual- exists when a person can produce more of a certain good/service than someone else in the same amount of time
  • National- exists when a country can produce more a good/service than another country can in the same time period
Comparative Advantage

  • Individual/National- exists when a n individual or nation can produce a good/service at a lower opportunity cost than another individual or nation
Absolute Advantage = faster, more, more efficient

Comparative Advantage = lower opportunity cost

3 comments:

  1. thank you for these notes, Courtney! They cleared up some confusion for me but these notes would be better if you went into further explanation about these topics.

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  2. Great Blog! I like how straight to the point your information is. I would like to add that in comparative advantage, there are input and output problems. Input problems involve what can be produced using the least amount of resources, land, or time. Output problems are production, and lowest opportunity cost.

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