Absolute vs. Comparative Advantages

The theory of specializing in what we can do fastest and cheapest is called

• competition

• absolute advantage

• specialization

• comparative advantage

The ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity

• absolute advantage

• specialty

• production

• comparative advantage

Lana can bake 10 cakes in 8 hours, while Lenny can bake 4 cakes in 8 hours. Lenny has an Absolute Advantage in making cakes.

• True
• False

The country of Joetopia produces 4 billion gallons of cola, while the country of Amystan makes 400 million gallons of soda. Joetopia has an Absolute Advantage.

• True
• False

The country of Rockonya makes 1 television every 5 hours and 1 car every 20 hours, while the country of Jamonia makes 1 television every 24 hours and 1 car every 12 hours. Rockonya has a Comparative Advantage in making televisions.

• True
• False