Absolute Advantage in Trade: Definition and Examples


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What does it mean for a nation to have an absolute advantage in the production of a good?

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1. Assume that there are only two countries, Country A and Country B, producing only two goods, corn cereal and designer jeans. The table here shows the production possibilities for these two countries. Which of the following statements is correct?

2. The table here shows the labor hours necessary to produce one unit of two goods, salmon and coconut creme pies, in two countries. If labor is the only input used, which of the following statements is true?

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About This Quiz & Worksheet

An individual or business that can make a quality product at least as fast as someone else, and at a lower cost, can be said to have an absolute advantage. Assess your understanding of absolute advantage and a similar term, comparative advantage, with this quiz and corresponding worksheet. You'll need to be able to solve problems in order to pass the quiz.

Quiz & Worksheet Goals

Use this quiz and printable worksheet to test your understanding of the following:

  • The definition of absolute advantage in the production of a good
  • Identifying who has the absolute advantage in specific situations
  • Selecting true statements about comparative advantage in the production of a good
  • Situations where there is no absolute advantage in something

Skills Practiced

  • Reading comprehension- ensure that you draw the most important information from the lesson about absolute and comparative advantage.
  • Distinguishing differences- compare and contrast topics from the lesson, such as absolute advantage and comparative advantage.
  • Problem solving- use acquired knowledge to solve absolute and comparative advantage practice problems.

Additional Learning

To learn more about the absolute advantage in production, review the accompanying lesson on absolute advantage vs comparative advantage. This lesson covers the following objectives:

  • Understand what it means for a nation to have absolute advantage in the production of a good
  • Identify true statements about absolute advantage
  • Know what happens when a nation doesn't have an absolute advantage in production