$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!
Add File

Error goes here

Absolute And Comparative Advantage

Referencing Styles : APA | Pages : 1

The comparative and absolute advantages are some of the major concepts in international trade and in economics. They influence the way in which resources are devoted to production by nations. Absolute advantage refers to the difference in the abilities of the nation and the companies to produce goods efficiently. Nations use this analysis to gather information regarding those products that may not yield any benefit for the nation but rather may yield very little. The absolute advantage or disadvantage of the company in an industry can determines the type of goods it needs to produce to meet the customers need. For instance: both Italy and japan can produce automobiles but better quality cars with a higher profit margin can be earned by Italy and then it can be said that Italy has a competitive advantage over other countries belonging to the same industry. Comparative advantage takes place with a holistic view since under this concept it is believed that businesses or countries have all the necessary resources to produce variety of goods. The opportunity cost refers to those benefits that could have been earned by choosing the best possible alternative. This method is used when two products are beneficial and calculation will be done by the analyst in this case in order to choose one option over the other. For instance: Suppose Australia has sufficient resources with which it can produce either computers or smartphones. Australia can either prepare 20 computers or 20 smartphones with the same but it cannot produce both. From past analysis it has been found that smart phones yields higher profits as compared to computers. Therefore it can be said that in this case opportunity cost will be the cost of losing value that could have been got from the production of computers rather than a smartphone.

One example depicting the comparative advantage of a country is that America has a comparative advantage of innovation and creative thinking. Besides this, it has vast areas of land and it has two oceans in its surrounding. Therefore it has much arable land, fresh water and oil. Therefore businesses in America earn profits from selling natural resources at cheap prices and protection from any form of land invasion. One of the most important considerations is that the country has got diverse population that speaks a common language and there are different laws of the nation. The population of US that is diverse provides a wide market for testing new products. It is also one of the main reasons United States excels in providing consumer goods. The country also succeeded in becoming a global leader in all the different sectors such as aerospace, technology, equipment’s and others because of its diverse workforce. The country has been able to harness diversity for becoming a leader in innovative thinking. Another instance through which the concept of comparative advantage can be understood is that suppose XYZ and ABC are two companies engaged in the same business and belonging to the same industry. One company’s location is such that it can get its raw materials quite easily whereas the other is located in such a place where there is scarcity of raw materials. The company XYZ had to spend more money on delivery of the goods because it has to transport the raw material from other places whereas the company ABC gets all the raw materials easily and therefore this reason the company has a comparative advantage. ABC Company may not be carrying on its business more successfully than XYZ and in fact it may not be making goods of a better quality. Therefore these advantages came to the company due to the company’s access to cheaper material. Comparative advantage refers to the advantage of the company for producing goods at a much lower opportunity and marginal cost than others. Even when a country has an absolute advantage the countries still need to trade with other countries in order to gain from the same. Therefore in other others goods will be imported when the cost of locally producing goods is more than opportunity cost for importing. Allocation of the resources of the world takes place in a more effective way when comparative advantage is used for specialization. In case of international specialization, a country is capable of having more resources and therefore improving the techniques of production.

Therefore it can be said that comparative advantage is more important for any nation because even if a nation has an absolute advantage it still needs to reduce its opportunity cost to get a benefit. However, it is necessary to understand the difference between comparative and competitive advantage because competitive advantage refers to creating a better position in the minds of the customers in order to gain an advantage. Absolute advantage of a nation or a company or an individual refers to their ability to generate better results using the in form of goods, products or services using the same quantity of resources as are available to others. The concept was initially described in international trade context with labour as the only input. Sometimes it is also noticed that none of the parties involved in an international trade has any absolute advantage. For instance: if a company can produce a particular commodity in 8hours approximately and the same commodity can be produced by another company in 2hoours than the 2nd company is said to have an absolute advantage.


OR boasts qualified and experienced experts, who assist students to accomplish essays of all types within any given deadline. Our wide range of essay writing services ranges from proposal essay help, argumentative essay help, comparative essay help to literature essay help. Moreover, students from any background or pursuing any educational discipline can avail our services. Some of our popular services include nursing essay help, MBA essay help, English essay help, law essay help and much more.

Save Time & improve Grade

Just share requirement and get customized Solution.

We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

Add File

Error goes here




Overall Rating



Our Amazing Features


On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.


Plagiarism Free Work

Using reliable plagiarism detection software, only provide customized 100 percent original papers.


24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat. If you are unable to calculate word count online, ask our customer executives.


Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.


Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

610 Order Completed

100% Response Time

Cheryl Zhao

PhD in Statistics

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2115 Order Completed

97% Response Time

Kimberley Chen

MPA in Accounting

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

755 Order Completed

95% Response Time

Douglas Cowley

Masters in Finance with Specialization in Audit

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 4/5

3076 Order Completed

99% Response Time

Emily Wei

Doctor of Philosophy (Ph.D) in Civil Engineering

Singapore, Singapore

Hire Me

FREE Tools


Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.


Essay Typer

Get different kinds of essays typed in minutes with clicks.


GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.


Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.


Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability




Your Approx Earning

Live Review

Our Mission Client Satisfaction

Able to get my work done after few changes, which were done as per suggestion provided by us. Appreciate their positive approach for this


User Id: 361833 - 15 Jan 2021


student rating student rating student rating student rating student rating

Amazing experience with you guys. I got 20/20. You are the best in the market i tried multiple sites but you guys gave best output.


User Id: 427239 - 15 Jan 2021


student rating student rating student rating student rating student rating

good paper, thank you very much. i am looking forward to working with you. Recommended


User Id: 536208 - 15 Jan 2021


student rating student rating student rating student rating student rating

thanks a lot thanks a lot thanks a lot thanks a lot thanks a lot thanks a lot thanks a lot


User Id: 553562 - 15 Jan 2021


student rating student rating student rating student rating student rating
Absolute And Comparative Advan... has been added in your library.
callback request mobile
Have any Query?