Question

What is the difference between absolute and comparative advantage?

Answer 1

Absolute advantage mean you can produce a good using less resources.
Comparative advantage mean you can produce a good at smaller opportunity cost.

Answer 2

Absolute Advantage means you can produce a good using less resources.

Comparative Advantage means you can produce a good at smaller opportunity cost.

The standard example is 2 countries and 2 products.

Say country A - 1 employee can produce in a week.

2 Cars or 700 shirts

Country B 1 employee can produce

1 Car or 300 shirts.

Country A has an absolute advantage in Cars and in shirts.

But Country B has a Competitive Advantage in Cars as 1 car = 300 shirts to them while 1 car = 350 shirts in Country A.