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In: Economics

Please give comments, thank you. In economics, the principle of absolute advantage refers to the ability...

Please give comments, thank you.

In economics, the principle of absolute advantage refers to the ability of a party to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources, and The law or principle of comparative advantage holds that under free trade, an agent will produce more of and consume less of a good for which they have a comparative advantage. The more good and services that a country can product the better trade agreements they can come up with.so for the reason i would chose Absolute advantage.

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Expert Solution

in absolute advantage we only look at the more abundant factor we have and the more of what we can produce without taking care of the opportunity cost that we are forgoing which ultimately hinders the economy to achieve maximum benefit. say for example a country has absolute advantage in production of mango but has comparative advantage in production of pinaple it means the country can produce more pinaple by using the resources that he was devoting for mango and can trade pinape for mango so that both the country get maximum advantage but if the country continues to produce mango without taking care of the comparative advantage it has it will loose on more pinaple production because the opportunity cost of producing mango is more in terms of pinaple here. so looking at the opportunity cost of producing one commodity gives better incite to produce and trde the right thing. so here the comparative advantage should also be looked after rather than going for absolute advantage alone.


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