Author Question: Explain the concepts of absolute advantage and comparative advantage. Is it possible for a firm to ... (Read 115 times)

lracut11

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Explain the concepts of absolute advantage and comparative advantage. Is it possible for a firm to have an absolute advantage in producing something without having a comparative advantage? Why or why not?
 
  What will be an ideal response?

Question 2

An increase in the expected inflation rate
 
  A) leads to a movement downward along the short-run Phillips curve.
  B) shifts the short-run Phillips curve downward.
  C) shifts the long-run Phillips curve upward.
  D) shifts the short-run Phillips curve upward.
  E) leads to a movement upward along the short-run Phillips curve.



reversalruiz

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Answer to Question 1

Absolute advantage refers to the ability to produce a good using fewer resources than someone else. Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another producer. Yes, a firm can have an absolute advantage without having a comparative advantage. A firm may be able to produce more of a good or service than its competitors, but that does not necessarily mean it can produce the good or service at a lower opportunity cost than its competitors.

Answer to Question 2

D



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