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absolute advantage

   Also found in: Financial, Wikipedia 0.01 sec.

absolute advantage

Advantage of a producer in the production of a good when it can produce that good at a lower absolute cost than other producers. For example, producer A can manufacture a good for 2 when producer B can only manufacture it for 3. This differs from comparative advantage which compares relative costs of production. For example, if producer A can produce good X for 2 and good Y for 4, and producer B can produce good X for 3 and good Y for 30, then producer A has an absolute advantage in both X and Y. But producer B has a comparative advantage in good X because it can produce it for 1/10th of the price of good Y whereas producer A can only produce it for 1/2 the cost.


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Get a free sample issue of Absolute Advantage with articles such as "Wired for Wellness.
Neither iron chills, nor copper chills have an absolute advantage.
A main airline is more likely to spin off a low fare alternative the larger is the net absolute advantage of its high fare good relative to the net absolute advantage of low fare supply, i.
 
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