the global context

Question 1

absolute advantage

Answer 1

when a country can produce a product using fewer FoP than another nation

Question 2

comparative advantage

Answer 2

states that a country should specialize in the goods and services it can produce at the lowest opp cost, and then trade with another country

Question 3

Limitation of comparative advantage

Answer 3

Pefrect knowledge
no transport costs
no EoS
Rates of inflation ignored
No import controls
non-price competitiveness ignored
exchange rate movements ignored
R&D investment ignored