Absolute Advantage

Definition

Absolute advantage refers to a situation where one country can produce a good or service more efficiently than another country, using the same amount of resources.

Related terms

Comparative Advantage: Comparative advantage is when one country has a lower opportunity cost in producing a particular good or service compared to another country.

Terms of Trade: Terms of trade refer to the ratio at which countries exchange goods and services with each other.

Specialization: Specialization occurs when individuals, businesses, or countries focus on producing specific goods or services that they have a comparative advantage in.