Absolute and Comparative Advantage

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Uploaded by on Mar 21, 2009

This little parable illustrates how absolute and comparative advantage are defined, and suggests that comparative advantage goes to the heart of the free trade argument - whoever has the lowest opportunity cost has comparative advantage and should make the good or provide the service, selling those to a trading partner with higher opportunity costs.

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Education

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  • Very helpful video. Couldn't have been explained any better.

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