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

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

Therefore Portugal has an absolute advantage in the production of wine. If the two countries specialize in producing the good for which they have the absolute advantage and if they exchange part of the good with each other both of the two countries can end up with more of each good than they would have in the absence of trade.

Tue Sep 11 2007 14:30:00 GMT-0400 (Eastern Daylight Time) · Production is a process of combining various material inputs and immaterial inputs (plans know-how) in order to make something for consumption (output). It is the act of creating an output a good or service which has value and contributes to the utility of individuals. The area of economics that focuses on production is referred to as production theory which in many respects is similar to …

Sun May 11 2003 14:30:00 GMT-0400 (Eastern Daylight Time) · David Ricardo argued that a country does not need to have an absolute advantage in the production of any commodity for international trade between it and another country to be mutually beneficial. Absolute advantage meant greater efficiency in production or the use of less labor factor in production. Two countries could both benefit from trade if each had a relative advantage in production.

A country should specialize in whatever good it can produce at the lowest cost trading this good to buy other goods it requires for consumption. This allows for countries to benefit from trade even when they do not have an absolute advantage in any area of pr…