what is the difference between absolute advantage and comparative advantage?\n○ absolute advantage is the…

what is the difference between absolute advantage and comparative advantage?\n○ absolute advantage is the ability to produce a good or a service at a lower production cost than competitors. comparative advantage is the ability to produce a good or service at a lower opportunity cost than competitors.\n○ absolute advantage is the ability to produce a good or a service at a lower opportunity cost than competitors. comparative advantage is the ability to produce a good or service at a lower production cost than competitors.\n○ absolute advantage is the ability to sell a good or a service at a lower price than competitors. comparative advantage is the ability to sell a good or service at a higher price than competitors.\n○ absolute advantage is the ability to sell a good or a service at a higher price than competitors. comparative advantage is the ability to sell a good or service at a lower price than competitors.

what is the difference between absolute advantage and comparative advantage?\n○ absolute advantage is the ability to produce a good or a service at a lower production cost than competitors. comparative advantage is the ability to produce a good or service at a lower opportunity cost than competitors.\n○ absolute advantage is the ability to produce a good or a service at a lower opportunity cost than competitors. comparative advantage is the ability to produce a good or service at a lower production cost than competitors.\n○ absolute advantage is the ability to sell a good or a service at a lower price than competitors. comparative advantage is the ability to sell a good or service at a higher price than competitors.\n○ absolute advantage is the ability to sell a good or a service at a higher price than competitors. comparative advantage is the ability to sell a good or service at a lower price than competitors.

Answer

Brief Explanations:

To solve this, we recall the definitions: Absolute advantage is the ability to produce a good/service at a lower production cost than others. Comparative advantage is the ability to produce a good/service at a lower opportunity cost (what is given up to produce) than others.

  • The second option swaps the definitions (absolute with opportunity cost, comparative with production cost) – incorrect.
  • The third and fourth options relate to selling prices, but absolute and comparative advantage are about production (not selling price) – incorrect.
  • The first option correctly matches absolute (lower production cost) and comparative (lower opportunity cost) advantage.

Answer:

A. Absolute advantage is the ability to produce a good or a service at a lower production cost than competitors. Comparative advantage is the ability to produce a good or service at a lower opportunity cost than competitors.