ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Absolute advantage is the ability of an individual, company, region, or country to produce a greater quantity of a good or service with the same quantity of inputs per unit of time, or to produce the same quantity of a good or service per unit of time using a lesser quantity of inputs, than its competitors.

Detailed explanation-2: -Comparative advantage is a country’s ability to produce more of a given product than can another country of comparative size; absolute advantage is a country’s ability to produce a given product relatively more efficiently than a larger country.

Detailed explanation-3: -Absolute advantage describes a situation in which an individual, business or country can produce more of a good or service than any other producer with the same quantity of resources. The United States, for example, has a skilled workforce, abundant natural resources, and advanced technology.

Detailed explanation-4: -Even when one country has an absolute advantage in all products, trade can still benefit both sides. This is because gains from trade come from specializing in one’s comparative advantage.