Business

Learn About Economic Principle of Absolute Advantage: Definition and Meaning in Economics

Written by the MasterClass staff

Last updated: Sep 2, 2021 • 4 min read

Imagine that you own property that contains a large grove of trees, and for some reason, you decide you want to turn those trees into paper. Let’s also imagine that an international paper conglomerate owns an equally large grove of trees of the exact same species. It is safe to say that the international paper conglomerate would be able to make more paper from its trees than you would. (No offense.) This means that the paper conglomerate has an absolute advantage in paper-making market.