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Absolute advantage

Absolute advantage is a situation in which a country, or sometimes a person or company, is more efficient at producing something than its competitors (i.e. its output per input unit is higher). This gives an advantage to established firms which can keep costs low in comparison to new entrants.

Absolute advantage is the advantage for a nation that has a monopoly on a product or can produce it at the lowest cost.

A person, company or country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another person, company or country.

Category: Economics
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