What are real life examples of absolute advantage?

Answer 1

Absolute advantage occurs when a country or entity can produce a good or service more efficiently than another. For instance, Saudi Arabia has an absolute advantage in oil production due to its vast reserves and lower extraction costs compared to many other countries. Similarly, China has an absolute advantage in manufacturing electronics, as it can produce them at a lower cost due to economies of scale and a large labor force. These examples illustrate how certain regions or countries can specialize in specific industries where they hold a distinct efficiency.