Advantage Of Absolute Advantage

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Recommended: Theory of comparative advantage

Advantages in the Market
Ofrecina, Lopez
College of the Sequoias

Advantages in the Market
In brief there are several concepts that should always be taken in to consideration when creating or marketing a new product. Comparative advantage and absolute advantage are always factors for nations competing with one another. An economy must first obtain at least one of these advantages in order to market a product successfully. President Abraham Lincoln used these concepts when discussing the completion of the transcontinental rail road system.
Comparative Advantage
The concept of comparative advantage is actually quite simple. Comparative Advantage is the ability to carry out a particular economic activity more efficiently than another activity. In fact this concept is being used by several nations around the world. For example Switzerland, this nation produces several goods and services such as cheese, and fine chocolates. If the nation sees the opportunity to produce a more cost effective product it will then sacrifice the production of the least money producing product. In Switzerland’s case it would come to the two products cheese and chocolates. If they could produce the cheese at a lower cost than the chocolates the production for the cheese would increase as the production of the chocolates would decrease. Thus giving Switzerland the comparative advantage, they could always purchase or trade for cheaper chocolates with other nations. (The Theory of Comparative Advantage, 2014).
Absolute Advantage
Having absolute advantage means a nation or its economy could produce certain goods using less resources at a much lower cost than others. This does not necessarily mean that an economy should produce such a product. However there are...

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...ted States were to build their own rails then they could then keep the money regulating within its own economy. We have our own iron to produce the rails and also the manufacturing capabilities to do so. This would then reduce spending as well as give a solution to the issue of the uncompleted railroad. That way the US would still complete the transcontinental railroad, but as well keep its own money in its own economy. The president used the concept of absolute advantage to resolve this issue and in this case happened to work out quite well.

Reference Page
The Theory of Comparative Advantage. (n.d.). Globalization101. Retrieved May 7, 2014, from http://www.globalization101.org/the-theory-of-comparative-advantage/
Absolute Advantage. (n.d.). Economics Help. Retrieved May 7, 2014, from http://www.economicshelp.org/blog/glossary/absolute-advantage/

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