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I'm from Flopstolla. My country has the ability to produce 100 units of manufactured goods or 300 units of service goods each year. I think Flapstolla has an absolute and comparative advantage in both goods!
And I think that she is wrong! Blerterston definitely has the comparative advantage in manufactured goods! We have the ability to produce 75 units of manufactured goods and 150 units of service goods each year.
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But we can make more of both goods, including manufactured goods, so should't we have the comparative advantage.
But you only have a comparative advantage if you lose out on fewer of the other good when you use all of your resources to produce that one item.
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So for Flopstolla, for every manufactured goods you produce, you lose out on 3 service goods, but for Blerterston, we only lose out on 2 service goods for every manufactured good we produce.
Oh I get it. Comparative advantage isn't about who makes more of each, its about minimizing how many goods you lose out on during production.
Exactly, so while you may be able to produce more of both with the same resources, we can produce more manufactured goods and lost out on fewer service goods with those same resources.
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Not necessarily, you have the ability to make more of both goods and have an absolute advantage because you utilize fewer resources to produce more of both.