The ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group.
- If absolute advantage rules, capitalism itself will redistribute income and wealth from rich countries to poor ones.
- Hence, people in general, not only nations, divide labor among themselves according to their comparative advantages (and not according to their absolute advantages as perhaps is the common belief, shared also by Smith).
- Ricardo demonstrated that although a country does not have an absolute advantage in the production of any goods vis-à-vis another country, gains can still be made from international trade.
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