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Introduction To Economics

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Does either person have an absolute advantage in producing both products? Should these two planners be self-sufficient (each producing statements and answering phones) or specialize?

Absolute advantage: The ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

A country has an absolute advantage economically over another when it can produce something more cheaply. This term is often used to differentiate between comparative advantage

Phil can produce one financial statement while Francis can produce 3 statements. Phil can answer 10 phone calls while Francis can answer 12. Francis has the absolute advantage over Phil.

Self Sufficient people under a market system guided by the prices of products and resources make better decisions. If it is sensible for a person to produce the product for which he has an advantage, it is a lower opportunity cost than another person.

Self Sufficient people are able to provide for oneself without the help of others; able to provide for your own needs independent, having undue confidence, and smug. refers to the state of not requiring any outside aid, support, or (in hard line cases) interaction, for survival; it is therefore a type of extreme personal or collective (group-based) autonomy. Self-sufficiency is usually applied to varieties of sustainable living in which nothing is consumed outside of what is produced by the self-sufficient individuals. Specialization increases productivity through the division of labor, a result of the benefits of repetition, continuity and innovation. These two planners are both exceptional and I would say that both should be specialized, they both can provide the technical skills for the product and responsibility for the task that both members can work on to get the job done. Both Phil and Francis may be able to get the job done



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