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Absolute advantage

Updated: Aug 20, 2021

The ability to produce an output using fewer inputs than other producers. With only one type of resource, such as hours of work, producer with lower inputs has an absolute advantage. When there are many factors of production absolute advantage means that the production set for one producer is everywhere outside that of another. Absolute advantage gives no guidance on how to allocate resources, which are best employed where their comparative advantage is greatest.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.