QA › Economics › What are the two steps a producer can take to gain an absolute advantage?
Q

What are the two steps a producer can take to gain an absolute advantage?

1.Produce more goods. 2. Use high-quality resources. 3. Produce more expensive goods. 4. Use fewer resources. 5. Produce high-quality goods. 6. Use local resources.
A

Producers have a huge task to make sure that they remain relevant in the market. One of their biggest goals is to have an absolute advantage. A producer will have an absolute advantage in such products where it has a productivity edge over other producers. This can only be achieved if a producer can produce more goods and use fewer resources to achieve that.

Absolute advantage is based on the ability to produce effectively using fewer resources of labour and capital, just to mention but a few. This is unlike comparative advantage, which happens when a producer’s production is at a lower cost than the cost of production in other goods. That approach gains the producer trade.

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