ABSOLUTE ADVANTAGE
INDIVIDUAL
-Exists when a person can produce more of a certain good/service than someone else in the osme 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
-A person or a nation has a comparative advantage in the production of a product when it can produce the product at a domestic opportunity cost than can a trading partner
OUTPUT Ex's INPUT Ex's
miles per gallon # of hours ro do a job
words per min # of gallons of paint to paint a house
apples per tree # of hours to pick apples
SPECIALIZATION AND TRADE
-Gains from trade are based on comparative adv. not absolute adv.
-Gains from trade are based on comparative adv. not absolute adv.
To better understand and differentiate output and input problems, watch this video. https://www.youtube.com/watch?v=z9SAzSm24qg
ReplyDeleteI was told that an easy way to find the difference between a situation being input or output is that output would include per to insinuate an amount in specific time while the input would focus on time to produce the same amount of a product.
ReplyDeleteAbsolute advantage means a country produces more of a product than another country. Comparative advantage has to do with the opportunity cost of producing one product over another product.
ReplyDelete