Differentiating between Comparative and Absolute Advantage


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What is the difference between an absolute and comparative advantage?

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1. What determines if a country has an absolute advantage in the production of a good?

2. A factory in the United States is deciding whether or not to use a new facility to produce cars, or clothing. The cars will cost more than the clothing to manufacture, but will sell for significantly more as well. Which item has the lowest opportunity cost?

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About This Quiz & Worksheet

Comparative and absolute advantage are important concepts to know when thinking about international trade. This quiz/worksheet combo will help you test your understanding of what these concepts mean in relation to the facilitation of products around the world. Some of the terms you'll be assessed on deal with the selection of resources, specialization, and lower opportunity cost.

Quiz & Worksheet Goals

In these assessments you'll be tested on terms surrounding:

  • Types of advantage
  • The allocation of resources
  • Types of cost

Skills Practiced

This quiz and worksheet allow students to test the following skills:

  • Defining key concepts - ensure that you can accurately define important terms corresponding to the devotion of resources as well as the loss of benefits
  • Distinguishing differences - compare and contrast different types of advantage
  • Information recall - access the knowledge you've gained regarding the specialization of production

Additional Learning

To learn more about international trade, review the accompanying lesson called Differentiating between Comparative and Absolute Advantage. This lesson covers the following objectives:

  • Understand the implications of comparative and absolute advantage within international trade
  • Define marginal cost
  • Understand what constitutes a lower opportunity cost
  • Learn about the conditions that affect resource allocation
  • Define international trade