Briefly Explain the Strengths and Weaknesses of the Absolute Advantage

question 21

Essay

Briefly explain the strengths and weaknesses of the absolute advantage and comparative advantage trade theories.

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Definitions:

Standard Cost System

A system of accounting that uses predetermined costs for calculating variances and tracking operational performance.

Job Order Cost System

A cost accounting system in which costs are assigned to each job or batch.

Overhead Volume Variance

The difference between the expected (budgeted) and actual overhead costs attributed to a change in production volume.

Normal Capacity

The average level of operational output that can be sustained over a period under normal conditions, taking into account regular downtime and maintenance.