Sunday, May 17, 2015

Absolute:
  • Individual - Exists when a person can produce more of a certain good/service than someone else in the same amount of time
  • National - same as individual
  • Looking at what's faster, more efficient
Comparative:
  • Individual/National - When they can produce good/service at a lower opportunity cost than another individual or nation
  • Only one nation can have the absolute advantage in one product
  • Looking at lower opportunity cost
Input Problem vs. Output Problem (Comparative):

Input Problem - What can be produced using least amount of resources land or time.
    • Chosen Item/Forgone Item
Output Problem - Deals with production
    • What is given up/what is produced
  • Both problems look at lower opportunity cost
In case you having trouble doing thee calulations..
https://www.khanacademy.org/economics-finance-domain/microeconomics/choices-opp-cost-tutorial/gains-from-trade-tutorial/v/comparative-advantage-and-absolute-advantage

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