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    Absolute or Comparative Advantage

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    As a manager of a financial planning business you have two financial planners, Phil and Francis. In an hour, Phil can produce either one financial statement or answer 8 phone calls, while Francis can either produce 2 financial statements or answer 10 phone calls. Does either person have an absolute advantage in producing both products?

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    Solution Preview

    Absolute advantage is a situation where an entity can produce a good or a service using less resources than some other entity.

    Comparative advantage is a situation where an entity can produce a good or a service at a lower opportunity cost than some other entity.

    In this case Phil can produce ...

    Solution Summary

    Absolute or Comparative Advantage are assessed.

    $2.19