What is the difference between the absolute advantage and the comparative advantage?

Absolute advantage is used to describe a situation where a person, company entity or country can produce something at a price that is lower than others. The comparative advantage concerns a situation where the same type of commodity can be produced with lower costs of the opportunity than others. The difference between the absolute advantage and the comparative advantage is the difference between the benefits of the two factors. The absolute advantage is focused on the advantage of costs, while a comparative advantage is based on opportunities. The absolute advantage also provides more benefits in the store than a comparative advantage.

A comororive advantage occurs when the product can be produced more efficiently than other people, companies or countries that produce the same goods. The main benefit of a comparative advantage in economics is the idea of ​​trading in a product that is more efficient in the production of a product that is less effective in production. This saves time, materials and work, while reducing the occasional cost of making good. Reducing the cost of the opportunity shows roBetween the absolute advantage and comparative advantage.

The example of this difference is whether Earth A can produce 10 pairs of shoes per hour and two sets of pencils per hour, while Earth B can produce 100 sets per hour and one pair of shoes per hour, both countries have a comparative advantage in different subjects. While Earth A has a comparative advantage in shoe production, Earth B has a comparative advantage in the production of pencils. Both countries can benefit from trading in these two items to compensate for items that are less efficient in production.

Another example of the difference between the absolute advantage and the comparative advantage is the type of benefits associated with the absolute advantage of the production of the item. Such a scattering may be that Earth A has a rich source of fresh oranges supplied by local farmers, while Earth B does not have such a type of climate that allows orange grownč from other countries. Country A has an absolute advantage over Earth B in the production of orange juice simply because it can get oranges for a much cheaper rate and without too much work, including traffic logistics. The country of Absolute Advantage, which has and has, is caused by its close proximity to the source of the raw material, unlike Earth B, which must make further effort to get the raw material needed to produce the same terminal product. As a result, it is more sensible for country B to import a finished product from Earth A.