Question

which is the best measurement to use to determine who might have the absolute advantage?

• high opportunity cost
• low opportunity cost
• low efficiency
• high efficiency

Explanation:

Define absolute advantage

Absolute advantage refers to the ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources, or to produce the same amount using fewer resources.

Relate absolute advantage to efficiency

Producing more output with the same inputs, or using fewer inputs for the same output, is a direct measure of high productivity and high efficiency.

Contrast with comparative advantage

Opportunity cost (low or high) is the metric used to determine comparative advantage, not absolute advantage. Therefore, efficiency is the correct metric for absolute advantage.

Answer:

• high opportunity cost
• low opportunity cost
• low efficiency
• high efficiency (Correct answer)