Question

Define absolute advantage. in your own words

Answer 1

Ans: The principle of absolute advantage refers to the production of greater quantity of goods or services by the producer with the same costs as compared to its competitors. Here the producer may be an individual , firm or a country. This principle was developed by Adam Smith. According to this principle , a country should specialize to produce that goods or services in which it has absolute advantage. It shows lower cost to produce the same goods or services as compared to the the other competitors.