1 / 5

Absolute and Comparative Advantage

Absolute and Comparative Advantage. Absolute Advantage—the ability to produce more of a given product using a given amount of resource (you are BETTER than anybody!)

almira
Download Presentation

Absolute and Comparative Advantage

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Absolute and Comparative Advantage

  2. Absolute Advantage—the ability to produce more of a given product using a given amount of resource (you are BETTER than anybody!) • Comparative Advantage-The ability to produce a product most efficiently given all the other products that could be produced (not better than anybody—but it is what YOU can do BEST!)

  3. What is Mike’s opportunity cost of vacuuming in terms of washing dishes? What is Mike’s opportunity cost of washing dishes in terms of vacuuming? What is Debbie’s opportunity cost of vacuuming in terms of washing dishes? What is Debbie’s opportunity cost of washing dishes in terms of vacuuming?

  4. Mike gives up 2 loads of dishes to vacuum. 60/30 • Mike gives up ½ a vacuumed room to wash dishes. 30/60 • Debbie gives up 1 load of dishes to vacuum. 45/45 • Debbie gives up 1 vacuumed room to wash dishes. 45/45

  5. Who has absolute advantage in vacuuming? Debbie • Who has absolute advantage in washing dishes? Mike • Who has comparative advantage in vacuuming? Debbie • Who has comparative advantage in washing dishes? Mike

More Related