00:01
So here we're talking about trade and we should start by distinguishing between absolute and comparative advantage.
00:08
If we don't think, if we don't know these, there's no way we can answer this question.
00:13
So you have absolute advantage if your production costs are lower in raw form, right? let's say per dollar, right? so if one person can produce something for a dollar and the other person produces it for two dollars, the other person producing it for the lower price has the absolute advantage.
00:45
But comparative advantage is if production costs are lower relative to relative lower, relative to other options.
01:03
So let's suppose that you are both good at fishing and you can both catch one fish an hour.
01:13
But if the other, if one of you is really good at gardening and the other one is not so good at gardening, the person who is really good at gardening should be gardening because they're much better at it.
01:20
They have a comparative advantage in gardening and the person who's bad at gardening has a comparative advantage at fishing.
01:29
So absolute is just who is the best in raw terms.
01:33
Comparative is who is the best relative to the other thing, right? so a is obviously wrong, right? there's nothing that is related that that defends a.
01:46
You absolutely can have the absolute advantage and have the comparative advantage.
01:52
And this has to be true sometimes because absolute in everything is possible.
02:02
And as we'll see, you must have comparative advantage.
02:08
In one thing...