Basic Concept Of Absolute Advantage
absolute advantage is the ability of an individual, company or country to produce a good or service at a lower cost than any competitor. an entity with an absolute advantage requires fewer inputs and/or has more efficient processes, allowing it to ? its competitor's prices and earn higher profits. consider a consultant, ?, who has worked as an accountant for ten years with a small company that provides commercial real estate consulting services. she hires a recent finance graduate, ?, to work as an accountant. why would she hire an accountant with little experience when she has ten years of experience, when she has an absolute advantage over ? in both accounting and consulting. by hiring ? to manage her books, ? has more time to do consulting work. she makes more money by specializing because any time she spends doing accounting work is time she can't spend during $200 an hour for consulting. that's why she hires an accountant for $30 an hour. ? is better of because he has a job and ? is better of because she can focus on her highest paying skill. the same principle applies to international trade. it might seem like a country with an absolute advantage producing wine and providing financial services should undertake both since it can do them at a lower cost than any other country. international trade theory, however, tells us that two countries will benefit from specialization based on their areas of comparative advantage. the country with a lowest opportunity cost of producing wine should produce wine, while the country with a lowest opportunity cost of providing financial services should provide financial services. like ? and ?, both countries are better of through trade because each frees up time to specialize any area where it is most productive.
- absolute advantage・・・絶対優位→https://ja.wikipedia.org/wiki/%E7%B5%B6%E5%AF%BE%E5%84%AA%E4%BD%8D
- international trade theory・・・貿易理論→https://ja.wikipedia.org/wiki/%E8%B2%BF%E6%98%93%E7%90%86%E8%AB%96
- comparative advantage・・・比較優位→https://ja.wikipedia.org/wiki/%E6%AF%94%E8%BC%83%E5%84%AA%E4%BD%8D
- opportunity cost・・・機会費用→https://ja.wikipedia.org/wiki/%E6%A9%9F%E4%BC%9A%E8%B2%BB%E7%94%A8