Absolute Advantage
Individual: exists when a person can produce more of a
certain good/service than someone else in the same amount of time (or can
produce a good using the least amount of resources).
National: exists when a country can produce
more of a good/service than another country can in the same time period.
Comparative Advantage
A person or a nation has
a comparative advantage in the production of a product when it can produce the
product at a lower domestic opportunity cost than can a trading partner.
Specialization and Trade
Gains from trade are
based on comparative advantage, not absolute.
Great notes, but you forgot to put the notes for the balance of payment, balance of goods & services, current, and capital account. Also you were a little vague in explaining Comparative and absolute advantage, we learned about input and output & examples of them so you could have put those examples. Other than that, good job on the notes.
ReplyDeleteWOw your blog is so cool! I agree with your notes on Comparative Advantage. An example for it could be a person saying 100 words per minute.
ReplyDeleteGreat notes, very informative, but if you could just elaborate more on specialization and trade.
ReplyDeleteIn my opinion, the difference between individual and national absolute advantage are negligible in the sense that it is either a person or a nation that holds advantage over their competitor. I have also never really seen the extra name on any question, but I guess it's good to know them anyway.
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