Absolute advantage is when a country can produce a good more efficiently, while comparative advantage involves producing at a lower opportunity cost and specialization for higher global production.
Absolute advantage occurs when a country can produce a good more efficiently, using fewer resources than another country. This can be due to natural endowments or higher productivity.
Comparative advantage comes into play when a country can produce a good at a lower opportunity cost compared to other countries. Specializing based on comparative advantage leads to higher global production and consumption levels.
Specialization based on comparative advantage allows countries to trade goods where they have a comparative advantage, leading to mutual benefits and increased overall production.
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