What is the difference between comparative advantage and absolute advantage in economics?
A country has comparative advantage in a product if it can produce it with the least opportunity cost. A country has absolute advantage in a product if it can produce the most of it. Let’s look at some examples: Country A can produce either 10 units of cars or 5 units of computers Country B can produce either 4 units of cars or 4 units of computers Country A has an absolute advantage in cars and computers (because it can produce more of each product) and a comparative advantage in cars (it needs to sacrifice only 0.5 units of computers to produce 1 unit of cars, whereas B has to sacrifice 1 unit of computers to produce 1 unit of cars) On the other hand, B has a comparative advantage in computers because it has to sacrifice only 1 unit of cars to produce 1 unit of computers while A has to sacrifice 2 units of cars.
