Absolute vs. Comparative Advantage
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)
- Output Problem - Deals with production
- What is given up/what is produced
- Both problems look at lower opportunity cost
Can you post an example? Maybe something to make it easy to remember the difference between input and output!
ReplyDeleteI really like how organized and helpful your notes are! I like how you defined each thing. But it would be better if you could explain comparative and absolute advantage a little bit more in depth, perhaps providing an example. It would also be nice if you can show us the differentiation of input and output. Thank you!
ReplyDeleteI really like the fact that you added that picture. Sometimes comparative and absolute advantage gets very confusing and the graph helps work things out in my mind and get things straight.
ReplyDeleteThis post is simplistic, and easy to the eye. However, I wish you would put examples and have a reference such as a website or video to go in depth of the subject. I feel like there is much more to the subject.
ReplyDelete