Respuesta :
The Given Statement Is TRUE.
What is Absolute Advantage?
Absolute advantage describes a situation in which an individual, business or country can produce more of a good or service than any other producer with the same quantity of resources.
The Absolute Advantage, in terms of trade flow is the condition of having the best product or higher production efficiently using little input. In the Absolute advantage, only products are exported where less resources and labor are required, compared to another country that can export the same product.
Common Misperceptions
- A country that has an absolute advantage in producing all goods still stands to benefit from trade with other countries, since the basis of the gains for trade is comparative advantage, not absolute advantage.
- It is not possible for an individual or country to have a comparative advantage in all goods.
Thus, we can conclude that the Statement that the basis for trade is comparative advantage, not absolute advantage is TRUE.
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