Absolute Advantage
Definition Absolute Advantage:
- Absolute advantage means that an economy can produce a good for lower costs than another. It means that less resources are needed to produce the same amount of goods.
Absolute advantage can be hard to measure for many complicated goods, because there are many different factor inputs.
Absolute advantage doesn't necessarily mean an economy should produce that good. This requires a country to have a comparative advantage. For example, one country may have an absolute advantage in many goods but it is not advisable to try and produce everything. It is better to focus on on goods where you have a relative advantage.
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