GENERAL KNOWLEDGE

Detailed explanation-1: -How Does Absolute Advantage Differ From Comparative Advantage? Absolute advantage is the ability of an entity to produce a product or service at a lower absolute cost per unit using a smaller number of inputs or a more efficient process than another entity producing the same good or service.

Detailed explanation-2: -The country with the lowest opportunity cost in a specific area has a comparative advantage. Having a comparative advantage can give a company the ability to sell their goods and services at a lower price than its competitors.

Detailed explanation-3: -A country has an absolute advantage in producing a good over another country if it uses fewer resources to produce that good. Absolute advantage can be the result of a country’s natural endowment. For example, extracting oil in Saudi Arabia is pretty much just a matter of drilling a hole.