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When individuals specialize in their comparative advantage goods and the Edgeworth box expands in size, we...

When individuals specialize in their comparative advantage goods and the Edgeworth box expands in size, we say there is an improvement in this type of efficiency. ___________________

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Answer #1

Absolute advantage is when a country achieves maximum production by the low cost of production. The other countries for producing the same amount of goods uses a maximum number of inputs. Suppose China and other Asian countries have an absolute advantage in the production of manufacturing goods as they have a low cost of labor supply.

A comparative advantage is achieved when a country has an ability to produce a good or service at lower marginal and opportunity cost. Resources specialize according to their comparative advantage because this gives a clear benefit to the country who specialize in one skill. For example, the oil supplying countries ahs clear cut advantage and hence are the richer country in the world.

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