Answer
Say Mark and Beth own bakeries. Mark can make 20 cookies an hour or 1 cake an hour. Beth can make 30 cookies an hour or 2 cakes an hour. Beth has the absolute advantage in cookie baking, as it takes her less time, but Mark has the comparative advantage because he forgoes less cake to make cookies (smaller opportuntiy cost).
Work Step by Step
Absolute advantage- the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group.
Comparative advantage- the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.
