Absoulte Advantage Flashcards
Absolute advantage definition
Absolute advantage refers to a country’s ability to produce a certain good more efficiently than another country at a lower cost and a higher quality using the same amount of resources as another country, region or producer. ie produce more for a given amount of inputs (time, labour, natural resources and conditions).
Absolute advantage examples
An example would be Banana production. Growers in Perth can produce bananas but the yield and quality is lower than that of bananas produced in Carnarvon. Carnarvon gets similar rainfall, has the same availability of soil but can produce bananas cheaper and at a higher quality then we can in Perth. Carnarvon has an absolute advantage in regard to seasons, climate, soil type and suitability of the plant to the region. Perth would be better off focusing on the production of table grapes or horticultural products with both growing well and have the industry localised to support them.
