Individuals and countries can be made better off if they will produce in what they have a comparative advantage and then trade with others for whatever else they want/need.
Absolute Advantage
The producer that can produce the most output OR requires the least amount of inputs (resources).
Comparative Advantage
The producer with the lowest opportunity cost.
*Countries should trade if they have a relatively low opportunity cost.
Input vs Output
Output Problem: Presents the data as products produced given a set of resources.
Ex: Number of pens produced
Input Problem: Presents the data as amount of resources needed to produce a fixed amount of output.
Ex: Number of labor hours to produce 1 bushel
*When identifyingabsolute advantage, input problems change the scenario from who can produce the most to two can produce a given product with the least amount of resources.
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