Question

When does one country have an absolute advantage over another country?

Answer 1

A country has an absolute advantage when it uses fewer resources to produce a good, while it has a comparative advantage when it can produce a good at a lower opportunity cost.

Step-by-step explanation:

A country has an absolute advantage over another country in producing a good if it uses fewer resources to produce that good. This can be due to a country's natural endowment or high levels of productivity in all goods. For example, a country that can extract oil more efficiently than another country has an absolute advantage in oil production.

However, even if a country has an absolute advantage in all goods, it can still benefit from trade through comparative advantage. Comparative advantage is when a country can produce a good at a lower opportunity cost compared to other countries. By specializing in producing a good with the least opportunity cost, a country can produce more and trade with other countries, ultimately increasing global production and consumption.

In summary, a country has an absolute advantage when it uses fewer resources to produce a good, while it has a comparative advantage when it can produce a good at a lower opportunity cost. Both absolute and comparative advantage play a role in trade and the overall efficiency of global production.

Answer 2

A country with an absolute advantage over another country achieves this if their production costs are lower.

Absolute advantage means a company or individual out perform another more efficiently. In this case, if two companies are making a product and one selling them for the same price, but one company can make the product for cheaper, they have an absolute advantage.