Absolute Advantage

Absolute advantage is the competency of an individual, business, area, or nation to generate more of a product or service per unit of time using the same amount of inputs as its competitors or to produce the same amount of a good or service per unit of time using fewer inputs.

Absolute advantage can be achieved by employing fewer inputs or a more effective procedure to produce the product or service at a lower absolute cost per unit.

Example of Absolute advantage

The position of the Canadian economy on the global market for agricultural goods relative to that of the vast majority of other countries is an example of absolute advantage. This is a result of the affordable costs and the relative abundance of land in Canada.

China, Thailand, and Vietnam, on the other hand, are nations that specialize in producing and exporting low-cost manufactured goods. These three countries have a substantial competitive advantage because of their significantly lower unit labor costs.

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