Question

Absolute and comparative advantage: Explain how these concepts describe the benefits and costs of international trade.

Answer 1

absolute advantage simply refers to the idea that one country can produce more of a given good (or produce it more efficiently) than the other country. Comparative advantage means that a country has a lower opportunity cost in the production of a good compared to the other country.

In this type of setting the benefit from international trade is derived from the idea that each country can produce the good for which they have a comparative advantage, trade with the other country, and consume more than if they didn't trade.

This is a really quick introduction, if you would like more on the subject just let me know.