Examples of Absolute advantage in the following topics:
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- A country has an absolute advantage in the production of a good when it can produce it more efficiently than other countries.
- Absolute advantage refers to the ability of a country to produce a good more efficiently that other countries.
- Absolute advantage differs from comparative advantage, which refers to the ability of a country to produce specific goods at a lower opportunity cost.
- A country with an absolute advantage can sell the good for less than a country that does not have the absolute advantage.
- Party B has an absolute advantage in producing widgets.
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- Absolute advantage refers to differences in productivity of nations, while comparative advantage refers to differences in opportunity costs.
- Absolute advantage compares the productivity of different producers or economies.
- In other words, Country A has an absolute advantage in making both food and clothing.
- Absolute advantage is important, but comparative advantage is what determines what a country will specialize in.
- Country A has an absolute advantage in making both food and clothing, but a comparative advantage only in food.
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- It is important to remember, however, that countries will specialize in goods in which they have a comparative advantage.
- If a country has an absolutely advantage in both skilled and unskilled workers, but a comparative advantage in unskilled workers, the country will specialize in the good that is intensive in the use of unskilled labor.
- The increased returns will go to unskilled workers (they will see their wages increase), even though the country also has an absolute advantage in skilled labor.
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- Even if one country is more efficient in the production of all goods (has an absolute advantage in all goods) than another, both countries will still gain by trading with each other.
- Chiplandia enjoys and absolute advantage, an ability to produce an item with fewer resources.
- It is important to distinguish between comparative advantage and competitive advantage.
- Unlike comparative advantage, competitive advantage refers to a distinguishing attribute of a company or a product.
- For example, having good brand recognition or relationships with suppliers is a competitive advantage, but not a comparative advantage.
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- Rather than absolute advantage, comparative advantage is the driving force of specialization.
- In sum, the producer that has a smaller opportunity cost will have the comparative advantage.
- It follows that Bob will have a comparative advantage in the production of mustard.
- This doesn't mean that both countries have the same production function - one could still be absolutely more productive than the other - but neither has a comparative advantage over the other.
- Tom has the comparative advantage in producing ketchup, while Bob has the comparative advantage in producing mustard.
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- When countries' autarkic productions are added (when there is no trade), the total quantity of each good produced and consumed is less than the world's PPF under free trade (when nations specialize according to their comparative advantage).
- This shows that in a free trade system, the absolute quantity of goods available for consumption is higher than the quantity available under autarky.
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- Quotas are limitations on imported goods, come in an absolute or tariff-rate varieties, and affect supply in the domestic economy.
- There are two main types of import quota: the absolute quota and the tariff-rate quota.
- An absolute quota is a limit on the quantity of specific goods that may enter a country during a certain time period.
- An absolute quota may also be set selectively for certain countries.
- As an example, suppose an absolute, global quota for pens is set at 50 million.
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- The primary drawback to this approach is that it measures relative poverty (as opposed to absolute poverty).
- That bottom 10% (assuming inflation has been accounted for) will be gaining wealth and purchasing power in absolute terms despite the fact that the Gini index will be much worse.
- While there is great absolute value in utilizing a poverty line to determining the percentage of people still surviving on less than is considered the bare minimum, there are also drawbacks to this method as well.
- As a result, there is high absolute value for each country but minimal comparative value between countries.
- One interesting risk in measuring poverty is the concept of voluntary poverty, or the active pursuit of living at the absolute bare minimum.
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- Countries benefit when they specialize in producing goods for which they have a comparative advantage and engage in trade for other goods.
- Trading-partners reap mutual gains when each nation specializes in goods for which it holds a comparative advantage and then engages in trade for other products.
- Countries benefit from producing goods in which they have comparative advantage and trading them for goods in which other countries have the comparative advantage.
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- Absolute poverty is poverty to the extent of which an individual is deprived of the ability to fulfill basic human needs (i.e. water, shelter, food, education, etc.).
- Poverty is generally divided into absolute or relative poverty, with absolute concepts referring to a standard that is consistent over time and geographic location.
- An example of absolute poverty is the number of people without access to clean drinking water, or the number of people eating less food than the body requires for survival.
- Absolute poverty levels, as discussed above, essentially underline the ability for an individual to survive with autonomy.