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Compare And Contrast Comparative And Absolute Advantage

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Compare and contrast comparative advantage with absolute advantage. Explain the reasons why comparative advantage is preferred to absolute advantage. What is the comparative advantage of your country of origin?
Absolute advantage remarks the difference in productivity of nations, and Comparative advantage refers to differences in opportunity cost.
Based on their definitions Absolute advantage which compares the productivity of different producers or economies, in this case the correct definition given to Absolute advantage is that a producer needs smaller amount of inputs in order to produce the good as needed.
Comparative advantage is defined as a party which produces a certain good or services at a lower cost comparing to another. Even if …show more content…

This shows the country has revealed Comparative advantage from the products. Form the table shown below Ethiopia is specialized in the production of listed product lines with highest RCA.
Source: Boundless. “Absolute Advantage Versus Comparative Advantage.” Boundless Economics. Boundless, 09 Nov. 2015. Retrieved 22 Mar. 2016 from https://www.boundless.com/economics/textbooks/boundless-economics-textbook/international-trade-31/introduction-to-international-trade-124/absolute-advantage-versus-comparative-advantage-493-12589/ Product code Product description RCA 2008 RCA 2009 RCA 2010 AVERAGE RCA
410530 Tanned/crust skins of sheep/lambs without wool on, in dry state 1607.68 1904.14 1952.694 1821.51
120740 Sesamum seeds 1314.68 1590.50 919.9517 1275.06
020450 Goat meat, fresh, chilled or frozen 1163.85 725.14 833.08 907.38
071350 Broad beans and horse beans dried or shelled 952.95 839.82 696.86 829.88
120799 Oil seeds and oleaginous fruits 900.0848 900.30 550.53 783.64
010619 Live animals 450.71 536.73 918.98 635.47
410621 Tanned/crust hides & skins of goats/kids without wool/hair on, in the dry 1599.62 81.67 0 560.43
070990 Vegetables, fresh or chilled 283.75 372.31 443.56

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