Unit 4.1 · Benefits of International Trade
Absolute and Comparative Advantage (HL only)
AO2AO4HLDiagram required
Syllabus Requirement
Understanding how countries gain from trade by specializing in goods they produce most efficiently. Includes opportunity cost comparisons and the source of advantage.
Assessment Objectives
AO2Application and Analysis
AO4Use of Appropriate Skills
HLThis topic is assessed at Higher Level only.
Summary
This topic covers the concepts of absolute and comparative advantage, which explain how countries can benefit from international trade. By specializing in the production of goods where they have an absolute advantage, countries can increase overall output and consumption, leading to greater prosperity.