Difference between revisions of "Absolute advantage"
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| − | Absolute advantage is an [[economic]] term meaning the ability to produce a good with | + | Absolute advantage is an [[economic]] term meaning the ability to produce a good with more inputs than the competition. |
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| + | The term is important in the theory of international trade because it is often assumed that (to take an example) if France has an absolute advantage over England in some product, say cheese, then France will normally import cheese from England. A seminal analysis by the 19th-century English economist [[David Ricardo]] showed that despite France's absolute advantage, it may well harm both countries for England to produce and export cheese to France. | ||
[[Category:economics]] | [[Category:economics]] | ||
Revision as of 19:03, April 7, 2007
Absolute advantage is an economic term meaning the ability to produce a good with more inputs than the competition.
The term is important in the theory of international trade because it is often assumed that (to take an example) if France has an absolute advantage over England in some product, say cheese, then France will normally import cheese from England. A seminal analysis by the 19th-century English economist David Ricardo showed that despite France's absolute advantage, it may well harm both countries for England to produce and export cheese to France.