Absolute Advantage: -Individual- exists when a person can produce more of a certain good/ service than someone else in the same amount of time (or can produce a good using the least amount of resources.)
National-exists when a country can produce more of a good/ service than another county can in the same time period.
Comparative Advantage:
-A person or a nation has a comparative advantage in the production of a product when it can produce the product at a lower domestic opportunity cost than can a trading partner.
Specialization and Trade:
-Gains from trade are based on comparative advantage, not absolute advantage.
Examples of Output Problem:
- per acre
-miles per gallon
-word per minute
-apple per tree
-television produced per hour
Examples of Input Problems:
-number of hours to do a job
-number of acres to feed a horse
-number of gallons of paint to paint a house
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