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Absolute Advantage

When a country experiences lower costs of producing a good than another country (i.e. produces more goods using the same resources).

Below is an example of how the absolute advantage between two countries works via a normal form matrix table. In this instance we have two countries and both produce two goods. Therefore the country that can produce the most units of each good given the same resources has the absolute advantage in the production of that good. 

Absolute advantage diagram

In this example, one country has an equal absolute advantage in both goods (France makes 3 for every item made by Poland). There is no incentive to specialise or trade. This is an unlikely theoretical outcome. it is more likely that countries will either enjoy a reciprocal absolute advantage or a comparative advantage.

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