Explain the Difference Between Absolute Advantage and Comparative Advantage

question 99

Essay

Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

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Definitions:

Free-Land Era

A historical period characterized by the availability and acquisition of land for free or at minimal cost, often associated with westward expansion in the United States.

Land Demanded

The quantity of land that consumers or firms wish to purchase at various price levels, typically influenced by factors such as location, fertility, and accessibility.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded by consumers at those prices.

Loanable Funds

The funds in financial systems available for borrowing, which consist of household saving, business saving, government budget surpluses, and bank loans.