• Card 33 / 100: What is the difference between absolute advantage and comparative advantage?

    Answer:
    Absolute advantage means that a person (or country) is better at doing something than another person (or country). For example, one person might be able to make 10 pizzas per hour, while someone else can only make 8. Comparative advantage means that it is efficient for a person (or country) to concentrate in a particular task—whether or not there is an absolute advantage in it—because this outlet offers the best tradeoff with other potential tasks. Sample Partial Credit Answer Comparative advantage is when people do the thing they're good at.

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Capitalism: The Market Economy

Access: Public Peer Review

Attribution:  Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY
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