absolute advantage

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Absolute advantage

A person, company or country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another person, company or country.

Absolute Advantage

The ability for an economic actor to produce a good or service using fewer resources. For example, if an individual produces 100 bricks using 100 units of labor and a second individual produces 200 bricks using the same amount of labor, the second individual has an absolute advantage in the production of bricks. This concept is generally attributed to Adam Smith. See also: comparative advantage, replacement cycle.
Absolute advantageclick for a larger image
Fig. 1 Absolute advantage. The relationship between resource input and output.

absolute advantage

an advantage possessed by a country engaged in INTERNATIONAL TRADE when, using a given resource input, it is able to produce more output than other countries possessing the same resource input. This is illustrated in Fig. 1 with respect to two countries (A and B) and two goods (X and Y). Country A's resource input enables it to produce either 100X or 100Y; the same resource input in Country B enables it to produce either 180X or 120Y. It can be seen that Country B is absolutely more efficient than Country A since it can produce more of both goods. Superficially this suggests that there is no basis for trade between the two countries. It is COMPARATIVE ADVANTAGE, however, not absolute advantage, that determines whether international trade is beneficial or not, because even if Country B is more efficient at producing both goods it may pay Country B to specialize (see SPECIALIZATION) in producing good X at which it has the greater advantage.
References in periodicals archive ?
At present, foreign-funded enterprises account for more than a half of the total market share; by virtue of the absolute advantages in aspects of capital, technology and scale, the foreign-funded enterprises occupy most of market in medium and large-scale cities.
Such results were achieved despite intense competition being faced by PIA from mush-rooming low cost carriers and especially Middle East airlines which have absolute advantages pertains to patronage of their Governments and fuel costs.
Among middle-grade watches, Swiss, Japanese and Taiwanese watches hold absolute advantages of competition.
And the findings concerning the selection of guest room prices show that standard guest rooms priced at RMB100-150 and RMB150-200 are the most popular and enjoy absolute advantages by each accounting for more than 30% of the consumer quantity; the ones priced at RMB200-300 take the second place with the consumer quantity proportion exceeding 15%; while others with excessively high or low prices are less accepted by the consumers.
Ye, the manager of network optimization department of Fujian mobile who had attended the whole network installation and tests, commented: "WFDS-TM system can not only satisfy the requirement of public mobile network access, but also has absolute advantages in network establish duration, cost and installation implementation.
Comparatively, China abounds in rare metal resources and enjoys absolute advantages in the reserves of tungsten, tin, stibium, rare earths, molybdenum, indium, and titanium.
Though foreign giants have absolute advantages on market share at present, those domestic software enterprises that are more adaptive to the changes of Chinese market and suit Chinese customer's demand will have more obvious advantages in the following 3-5 years.
One of the absolute advantages of working with MEI over other finance companies or directly with the manufacturers is that MEI offers Mobile Diagnostic Centers the ability to work with any PET/CT manufacturer, very Competitive Rates, and Flexible Terms and Conditions for financing our mobile imaging PET/CT equipment.
Totally speaking, East China takes absolute advantages, of which enterprise quantity in Zhejiang province accounts for 61%, having increased by 14 enterprises over that in 2005.