Question

Provide a real-world example from your personal life that demonstrate the concepts of absolute advantage and comparative advantage.

Answer 1

Absolute advantage means when a country can produce goods better and superior in comparison of other country's same good.This concept is told about the efficiency of one country for producing single product in comparison of other.in absolute advantage manufacture can produce higher quantity of good at a faster rate with great profit than comparison of other country.

While comparative advantage means producing those goods which has higher opportunity cost.hence in comparative advantage producer produce higher quantity of those goods which have higher opportunity cost from manufacturing of other good.He have different goods with different options but he select those good which has comparative advantage.

Example - Absolute advantage -

Real life example of my personal life- In our school there was a Interstate debate competition.So there were too many candidates from different class of my school .Our school management had to selected only two person from whole school.I Was very good in debate competition and i have won several award before.hence management selected to me for interstate debate competition because i can do this work better from other hence this is absolute advantage of me that i can do this work easily.

Comparative advantage - In our coaching center there were 2 options for students like they can take offline coaching class or can take online classes.

Offline classes means face to face interaction between student and teacher while online means studing online.hence a student has to select the option on the basis of opportunity cost of both these options and then they selected that option which has comparative advantage.