Comparative and Absolute Advantage Explained | Economic Concepts Explained | Think Econ

In this video we explain what the both absolute and comparative advantage is, while providing a numerical example, to help you learn the concept! If you have any questions, we'd love to answer them in the comment section.

As promised, here are links to our Production Possibilities Curve and Opportunity Cost videos, so feel free to check them out if you need a refresher:

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[gibblochea]

A great video! Short and sweet and to the point covering all of the important distinctions between absolute and comparative advantage. Well done!

[kavuyiwanki]

Kindly do a video on how to solve: Consider the table below showing amounts of good x and y that nation 1 and 2 can produce with one hour of labor time
N1 N2

X/labor hour 8 4
Y/ labor hour 2 6
(i) Which nation has absolute advantage in cloth and which one has absolute advantage in wheat? (explain your answer)
(ii) How much will nation 1 and nation 2 gain from trade if each nation specialised in the production of the commodity of its absolute advantage and exported some of its output for the commodity of its absolute disadvantage, at the exchange of 8X for 8Y. ( Gains to be measured in terms of both units of Y and labor time saved)