As we have talked about gains from trade using production possibilities frontier. Based on what we have learned, explain the difference between absolute and comparative advantage. Next, explain if two countries should trade if there is a comparative advantage but no absolute advantage. Lastly, if Pennsylvania were a country, what do you think our comparative advantages might be (in other words what kinds of economic goods do we do well compared to others)?

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Ans Absolute cost advantage was professed by Adam Smith and it refers to the ability of a country to ... View the full answer