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Difference Between Absolute Advantage and Comparative Advantage

A nation's absolute advantage is measured in relation to other nations. A nation has an absolute advantage in the production of a product any time it can produce that product at a lower cost than can other nation. A nation's comparative advantage is measured in relation to all of the goods and services the nation produces. A nation has a comparative advantage in those products that have the lowest opportuni­ty costs.

By specializing in the production of the product it can pro­duce mo.st efficiently, each nation is able to make the best use of its available resources. International trade then allows each nation to enjoy the most products at the lowest opportu­nity costs.

Words and Expressions

absolute advantage - абсолютное преимущество

calculate the economic benefits - подсчитывать экономиче­скую выгоду

comparative advantage - сравнительное преимущество

cost n - стоимость

decrease in self-sufficiency - уменьшение экономической самостоятельности

economic interdependence - экономическая взаимозави­симость

international trade - международная торговля

manufactured goods - промышленные товары

narrow range of products - ограниченный ассортимент про­дукции

productivity n - производительность

specialization n - специализация

unequal distribution of resources - неравномерное распре­деление ресурсов

voluntary exchange of goods - добровольный обмен товара­ми

well-developed means of production for goods - хорошо раз­витая база средств производства товаров

well-tapped natural resources - хорошо разработанные природные ресурсы


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