Absolute Advantage
Definition
Absolute advantage refers to the ability of a country, individual, or firm to produce a good or service more efficiently than another country, individual, or firm. It is based on comparing the productivity levels and resource allocation between two entities.
Related terms
Comparative Advantage: Comparative advantage is when one entity has a lower opportunity cost in producing a particular good or service compared to another entity.
Trade: Trade involves the exchange of goods and services between countries or individuals to benefit from their comparative advantages.
Efficiency: Efficiency refers to using resources effectively to maximize output and minimize waste.
"Absolute Advantage" appears in:
Subjects (2)
AP Macroeconomics
Intro to Business
Study guides (1)
AP Microeconomics - 1.4 Comparative Advantage and Trade
Additional resources (2)
AP Microeconomics - Unit 1 Overview: Basic Economic Concepts
AP Microeconomics - Unit 1: Basic Economic Concepts
Practice Questions (3)
Which of the following best defines absolute advantage in economics?
Absolute advantage focuses on?
Country A has an absolute advantage in producing both cars and trucks compared to Country B. Which of the following statements is most likely true?
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About Us
About Fiveable
Blog
Careers
Code of Conduct
Terms of Use
Privacy Policy
CCPA Privacy Policy
Resources
Cram Mode
AP Score Calculators
Study Guides
Practice Quizzes
Glossary
Cram Events
Merch Shop
Crisis Text Line
Help Center
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.