In the issue of dealing with economics there are many questions that arise about why one country does one thing and the other does another thing. Well there is one question that is often asked that is. Why do we trade with other countries? Most people would think that the US would never have to trade with other countries because of our rich lands and resources. This is true about our lands and resources but there are products and goods that only can be found or made in other countries. The US knows that people have desires for foreign products which they don't have and the same goes for other countries to us. Trade with other countries benefits each of the countries or maybe even other smaller surrounding countries.
The ability to produce a single product more efficiently than any other nation is an absolute advantage. The ability to produce a product more efficiently than another product is a comparative advantage. The difference in absolute advantage and comparative advantage is that for absolute advantage there is no other country that can produce the product more efficiently based on cost and productivity. Comparative advantage does not block out an ability of another country to produce the same product but it says that due to the cost or resources that will be used to produce the product it is not resource "friendly" and should be produced or provided by another company or person.
An example of absolute advantage is the ability of South America to produce bananas, coffee and cocoa more cheaply than the United States. While the United states can produce more manufactured goods like computers, airplanes and electric appliances than South America. Therefore, each country has an absolute advantage over the other in producing a specific product or good. Another example, the United States has an absolute advantage in electric drills and bedspreads production relative to the Philippines while the Philippines has the absolute advantage over the US in producing bedspreads.