comparative and absolute advantage

Question 1

Absolute advantage meaning

Answer 1

country can produce a product using fewer factors of production than another nation

Question 2

Theory of comparative advantage

Answer 2

If countries specialise according to their comparative advantage, the output will increase

Question 3

What is meant by: Comparative advantage?

Answer 3

producing good with the lowest opportunity cost

Question 4

What is meant by: Advantages of Specialization and Trade?

Answer 4

Leads to an increase in global output and living standards
May create economies of scale
Can lead to lower prices and more choice for consumers
the setting of MNCs leads to work and higher competition leads to more efficirency

Question 5

example of a countrys comparative advantage

Answer 5

Ireland - butter,cheese

Question 6

One example where country has benefited less from comparative advantage

Answer 6

Saudi Arabia - oil
During covid - prices went down
Were relying very much on oil