While competitive advantage means that an entity produces a product at a lower opportunity cost, absolute advantage means that an entity:
A)produces less of a product than its competitors
B)produces more of a product than its competitors
C)produces a better quality product than its competitors
D)produces a longer lasting product than its competitors

Question

Quizplus · Accepted Answer

Absolute advantage means that an entity produces more of a product than its competitors.
Key Takeaway: An entity (firm or country) has absolute advantage if it produces more of a product than its competitors with the same resources. For example, if a Chinese chip manufacturing company produces 10 chips for every 2 employees per hour while an American company produces 7 chips for every 2 employees per hour, the Chinese company has absolute advantage. In this example, labor is the input unit but any other resource can also be used.

While Competitive Advantage Means That an Entity Produces a Product