Question

Problem 2

Answer 1

Introduction

Absolute advantage theory is also known as Adam Smith's theory of international trade. This theory was found by Adam Smith who is also known as the father is economics. Individual companies or a country produce to the best of their ability i.e. more efficiently than their competitors. In earlier times it was followed that if a nation wants to grow, so all of them focus on the increase of exports. Comparative advantage is similar to the opportunity cost.