-Individual- exists when a person can produce more of a certain good/ service than someone else in the same amount of time (or can produce a good using the least amount of resources.)
-National-exists when a country can produce more o a good/ service than another county can in the same time period.
Comparative Advantage
-A person or a nation has a comparative advantage in the production of a product when it can produce the product at a lower domestic opportunity cost than can a trading partner.
Examples of output problem:
*word per minute
*miles per gallon
*tons per acre
*apple per tree
*television produced per hour
Examples of input problems:
*number of hours to do a job
*number of acres to feed a horse
*number of gallon of paint to paint a house
Specialization and trade
-Gains from trade are based on comparative advantage, not absolute advantage
(who can d what in a certain amount of time)
***Smallest number is who has opportunity cost***
The absolute advantage will be gained over both products while comparative advantage is the most efficient in one good only. Remember that, always!
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