All else being equal, which bakery has the absolute advantage?

1 answer:

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Assuming there are several companies (bakeries) competing in the bread market, the bakery which has the absolute advantage, would be the one which is able to manufacture the product, in this case bread, at a lower cost per unit than any other competitor (bakery) which produces the same good or service. This means that the production process of the bakery holding the absolute advantage is more efficient, as it uses a lower amount of inputs or lower priced ones.

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