Describe absolute advantage and comparative advantage with examples.
What will be an ideal response?
Answers will vary. Absolute advantage refers to thebenefit a country has in a given industry when it can produce more of a product than other nations, using the same amount of resources.China, for example, has an absolute advantage in terms of clothing production, relative to the United States.However, unless they face major trade barriers, the industries in any country tend to produce products for which they have acomparative advantage. Comparative advantage refers to thebenefit a country has in a given industry if it can make products at a lower opportunity cost than other countries.The United States boasts a comparative advantage versus most countries in movie and television program production.
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