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What is the key distinction between absolute advantage and comparative advantage in international trade?

Question 30 options:

Absolute advantage pertains to high-tech goods, while comparative advantage relates to labor-intensive products.

Absolute advantage relates to producing items at the lowest cost, while comparative advantage is about specialization in goods and services.

Absolute advantage refers to low-cost labor, while comparative advantage pertains to low-cost materials.

Absolute advantage focuses on specialized labor forces, while comparative advantage concerns specialized machinery.

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Answer 1

The correct answer is:

Absolute advantage relates to producing items at the lowest cost, while comparative advantage is about specialization in goods and services.

This option clearly distinguishes between the two concepts: absolute advantage is concerned with the ability to produce more of a good or service with the same resources compared to other producers, while comparative advantage focuses on the relative efficiency of producing different goods and services, emphasizing the benefits of specialization and trade based on opportunity costs.