ABSOLUTE & COMPETITIVE ADVANTAGES

Absolute & Competitive Advantages



Absolute & Competitive Advantages

Let us draw inspiration from the famous example of Great Company A and Company B. The two companies can produce cloth and wine. Suppose that Company A is able to produce 100 meters of cloth per hour of work and also 100 liters of wine in one hour. However, Company B can produce 90 meters of cloth per hour of work and 120 liters of wine in the same time. Company A then has an absolute advantage in cloth, and Company B has an absolute advantage in wine. According to the ...