Question

The primary difference between absolute and comparative advantage is A. absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost. B. absolute advantage is a concept that was utilized in communist countries and comparative advantage is a capitalist idea. C. absolute advantage can never change while comparative advantage depends on the relative cost of a​ good's resources. D. absolute advantage refers to the ability to produce a good or service at a lower opportunity cost and comparative advantage refers to the ability to produce more of a good or service using the same amount of resources.

Answer 1

The primary difference between absolute and comparative advantage is that absolute advantage refers to the ability to produce more using the same resources, while comparative advantage refers to producing at a lower opportunity cost.

Step-by-step explanation:

The primary difference between absolute and comparative advantage is that absolute advantage refers to the ability to produce more of a good or service using the same amount of resources, while comparative advantage refers to the ability to produce a good or service at a lower opportunity cost.

For example, let's consider two countries: Country A and Country B. Country A can produce 100 cars or 200 computers with the same amount of resources, while Country B can produce 50 cars or 100 computers with the same resources. In this case, Country A has an absolute advantage in both car and computer production because it can produce more of both goods. However, if we compare the opportunity cost of producing cars versus computers, we may find that Country A has a lower opportunity cost for producing computers, while Country B has a lower opportunity cost for producing cars. Therefore, Country A has a comparative advantage in computer production, while Country B has a comparative advantage in car production.

In summary, absolute advantage refers to producing more with the same resources, while comparative advantage refers to producing at a lower opportunity cost.

Answer 2

A. absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost.

Step-by-step explanation:

Let's assume there are two countries, x and y.

X produces 10 cheese and 10 bottles of wine while Y produces 6 cheese and 3 bottles of wine. Country x has an absolute advantage in the production of wine and cheese because it produces higher quantities of both goods when compared to country y.

Country x has a comparative advantage in the production of wine because its opportunity cost (1) is lower than the opportunity cost of country y (2).

Country y has a comparative advantage in the production of cheese because its opportunity cost (1/2) is less than that of country x (1).

I hope my answer helps you