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| Now lets say at any given time, Robo factory can make up to 6 robots and 3 cars. Whereas Androids R Us can make up to 1 robot and 2 cars. | |
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| Okay, so what does that mean? | |
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| This would mean that the Robo Factory has an absolute advantage in both the production of cars and robots because that factory can produce more of each product overall than the Androids R Us. | |
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| Oh. So whoever can make more has the absolute advantage. I get it now! But what about the Comparative advantage? | |
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| Well the comparative advantage for any product is determined by the oppurtunity cost. Which means the loss of potential gain from other products when one product is chosen. | |
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| Okay, so how do we determine the oppurtunity cost? | |
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