Test your knowledge 14.

Q1. A. The Absolute Advantage is the country’s inherent ability to produce specific goods efficiently
and effectively at a relatively lower marginal cost. However, Comparative Advantage refers to the
country’s capability to produce the specific good at lower marginal cost and opportunity cost.

Countries with an absolute advantage of producing a good focus on maximizing production with the
same available resources. Whereas Countries with comparative advantage consider the production of
multiple goods in the country while deciding the production of a specific good and resource allocation.

B.