Difference between Comparative advantage and Absolute advantage

A comparative advantage is when a country can produce a good at a lower opportunity cost than another country. For example, if the UK can produce 10 pharmaceuticals or 5 cars, whereas Belgium can produce 4 cars and 2 pharmaceuticals a day. The UK would have a comparative advantage in pharmaceuticals as they have an opportunity cost of 1/2 car whereas Belgium has an opportunity cost 2 cars. Hence, the UK has a comparative advantage in pharmaceuticals. An absolute advantage is where a country can produce more of a good regardless of opportunity cost. Using the example above the UK has an absolute advantage in both cars and pharmaceuticals over Belgium.Be careful though as the example shows a country can have an absolute advantage in a good but not necessarily a comparative advantage.

CT
Answered by Conor T. Economics tutor

5733 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Relate the competitive market and the monopoly setting


What is a simple definition of Keynes' sticky prices theory?


Explain with a diagram how a sugar tax affects the market equilibrium for A. coca cola, and for B. bottled water


What is the "Tragedy of the Commons" and how may it be solved?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning