Absolute Advantage

… a core term used in Economic Analysis and Atlas102

Definition

The Economist describes absolute advantage as the simplest yardstick of economic performance – if one person, firm or country can produce more of something with the same amount of effort and resources, they have an absolute advantage over other producers.

The Economist continues:

“Being the best at something does not mean that doing that thing is the best way to use your scarce economic resources. The question of what to specialise in – and how to maximise the benefits from international trade – is best decided according to comparative advantage. Both absolute and comparative advantage [see Comparative Advantage] may change significantly over time. as the study of how society uses its scarce resources.

Atlas topic, subject, and course

Trade (core topic) in Economic Analysis and Atlas102 Economic Analysis.

Source

The Economist, Economics A-Z, at http://www.economist.com/economics-a-to-z/a#node-21529328, accessed 5 May 2016.

Page created by: Ian Clark, last modified 5 May 2016.