ABSOLUTE ADVANTAGE VS COMPARATIVE ADVANTAGE NOTES (4/29/15)

Absolute Advantage 

• Individual: exists when a person can produce more of a certain good/service than someone else in the same amount of time
• National: exists when a country can produce more of a good/service than another country can in the same time period

Comparative Advantage 

• Individual/National: exists when an individual or nation can produce a good/service at a lower opportunity cost than can another individual or nation
• Input Problems
• where the country who can produce a set amount of something by using the least amount of resources, land, or time has the absolute advantage
• chosen item / forgone item
• Output Problems
• who can produce the problem the best
• what is given up / what is produced