Circular-Flow Diagram Quiz

Absolute advantage refers to the uncontested superiority of a country or business to produce a particular good better.

Comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production diversification.

They largely influence how and why nations and businesses devote resources to the production of particular goods.

<p>Absolute advantage is when a country or business is better at producing a specific good compared to others, without any competition.</p> Signup and view all the answers

<p>Comparative advantage is the idea that a country or business should focus on producing goods or services that have a lower opportunity cost compared to others.</p> Signup and view all the answers

<p>Absolute advantage allows a country or business to produce a specific good more efficiently and at a lower cost compared to others.</p> Signup and view all the answers

<p>Comparative advantage takes into account the opportunity cost of producing different goods or services.</p> Signup and view all the answers

<p>Absolute advantage and comparative advantage help determine how resources should be allocated to maximize efficiency and productivity.</p> Signup and view all the answers

<p>An example of absolute advantage is when a country can produce cars more efficiently and at a lower cost compared to other countries.</p> Signup and view all the answers

<p>Comparative advantage helps in choosing which goods or services to produce, based on their lower opportunity cost compared to others.</p> Signup and view all the answers