ABSOLUTE ADVANTAGE

The ability of an economic actor (an individual, a household or a firm) to produce some particular good or service with a smaller total input of economic resources (labor, capital, land, etc.) per unit of output than other economic actors. In analyzing the theory of trade and economic specialization , it is important to distinguish absolute from comparative advantage , since it is comparative advantage that determines the potential welfare gains from specialization and trade, and not absolute advantage. [See also: comparative advantage ]