Absolute advantage
Definition. Absolute advantage exists when one country can produce a good using fewer resources than another country, or equivalently produce more of that good from the same quantity of resources. It compares the productivity of nations directly in terms of physical output per unit of input.
Unlike comparative advantage, it ignores opportunity cost. A country can hold an absolute advantage in every good yet still gain from trade by specialising according to comparative advantage.
This term belongs to Comparative Advantage in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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