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| what are the two steps a producer can take to gain an absolute advantage? |
what are the two steps a producer can take to gain an absolute advantage?
Two steps a producer can take to gain absolute advantage:
Optimization of resources and Outsourcing can bring absolute advantage to the producer.
Cost cutting and proper management of inventory is necessary in order to get proper advantage and managing profit maximization ration
Two steps one can take in order to achieve absolute advantage,
1. Optimization of resources:
Be it renewable or non-renewable, resources must be used in optimum manner. Efficiency and effectiveness can be gained.
2. Outsourcing some tasks
It is not possible for business to perform all tasks online. Hence, some of the tasks such as auditing, branding etc. should be outsourced.
Explanation:
In the economic theory, the definition of absolute advantage is the ability to produce as much of a product as possible while using few resources. On the other hand, comparative advantage is something that can help a producer sell a good at a low price, which is attractive for customers, while retaining good sale margins.
A good example of a producer that gained an absolute advantage would be a country rich in petrol such as Saudi Arabia. Due to the abundance of the said resource in the region, the Saudi oil and petrol industry does not have to spend time and money on more sophisticated technologies, import, and transportation. Since Saudi Arabia is a provider, it can make influence the entire market or at least, play a significant role.
