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What is an absolute advantage example?

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Quick Answer

An absolute advantage example is Michael Jordan, who is the best at playing basketball. Adam Smith introduced the absolute advantage theory in the context of a nation, but it can be applied to individuals too.

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Full Answer

Smith, who was a Scottish economist, introduced the absolute advantage theory in 1776. If a nation could produce a specific good more than any other nation even with the same amount of resources, he said it had absolute advantage. David Ricardo, another economist, introduced the principle of comparative advantage. Each nation is said to have a comparative advantage at producing a good if it can produce it at a lower opportunity cost. Opportunity cost refers to what is given up for producing another good.

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