Question

please be original and use your own words

Explain how absolute advantage and comparative advantage differ.

Answer 1

Absolute advantage	Comparative advantage
A country is said to have absolute advantage if he is able to produce the good or service with minimum inputs as compared to his competitors	While comparative advantage means a country is able to produce the goods at lower opportunity cost than others
Absolute advantage is when a country is able to produce a given good with lower marginal cost,lesser manpower,lesser time without compromising the quality	Comparative advantage means country is able to produce a given good at relatively lower marginal cost
Absolute advantage is said to have if a country produces large amount of goods with same resources as another country	While comparative advantage allows the country to the product with better quality at low prices at compared to others.
For eg,India has an absolute advantage in operating call centres compared to Philippines because its labour cost is low.	For eg,oil producing countries have a comparative advantage in chemicals .Since locally produced oil serves as a cheap raw material in chemical making
Trade done here is not mutually beneficial.It only benefits the country with absolute advantage	Trade is mutually beneficial for both countries.