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Comparative advantage and absolute advantage Video Lecture - Economics

FAQs on Comparative advantage and absolute advantage Video Lecture - Economics

1. What is comparative advantage?
Ans. Comparative advantage refers to the ability of a country, individual, or company to produce a particular good or service at a lower opportunity cost than others. It is based on the concept of determining which economic agent can produce a good or service with the lowest opportunity cost.
2. What is absolute advantage?
Ans. Absolute advantage refers to the ability of a country, individual, or company to produce more of a particular good or service compared to others using the same amount of resources. It signifies the efficiency and productivity of a producer in terms of quantity produced.
3. How are comparative advantage and absolute advantage different?
Ans. Comparative advantage and absolute advantage differ in their focus. Comparative advantage considers the opportunity cost of producing a good or service, while absolute advantage focuses on the ability to produce more of a good or service with the same resources. Comparative advantage emphasizes efficiency, whereas absolute advantage emphasizes productivity.
4. Can a country have an absolute advantage in all goods and services?
Ans. No, it is highly unlikely for a country to have an absolute advantage in all goods and services. Absolute advantage is based on the concept of specialization, where a country excels in producing specific goods or services. Different countries have different resources, skills, and technologies, leading to variations in absolute advantages across various goods and services.
5. How can countries benefit from comparative advantage?
Ans. Countries can benefit from comparative advantage by specializing in the production of goods or services in which they have a lower opportunity cost. This allows them to allocate their resources efficiently and trade with other countries to obtain goods or services with a higher opportunity cost. By engaging in international trade based on comparative advantage, countries can enhance their overall economic welfare and achieve higher levels of productivity.
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Comparative advantage and absolute advantage Video Lecture - Economics

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