Submitted by johnsmiley24 on December 18, 2007

• Category: Business
• Words: 526
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Comparative And Absolute Advantyage

Comparative advantage is about identifying which activities a country or firm or individual is most efficient at doing. The ability to produce a particular good or service with a smaller total input of economic resources per unit of output than others is absolute advantage. Comparative Advantage under minds the economic case for free trade, but it is often misunderstood or misrepresented by opponents of free trade. It shows how countries can gain from trading with each other even if one of them is more efficient.
To see how this theory works imagine two countries, Alpha and Bravo. Each country has 500 workers and can make two goods, toys and stereos. Alpha’s economy is far more...

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