The ability of one person or nation to produce a good at a lower absolute cost than another is called a(n):
A) market advantage.
B) specialization advantage.
C) comparative advantage.
D) absolute advantage.

Question

Quizplus · Accepted Answer

Absolute advantage refers to a situation where one entity has the ability to produce a certain good or service at a lower cost than another entity, whereas comparative advantage refers to a situation where one entity has a lower opportunity cost of producing a certain good or service than another entity. Since the question specifies "lower absolute cost", the correct answer is D.

The Ability of One Person or Nation to Produce a Good