1. Absolute Advantage
When it is possible for one country to produce more goods and services than other countries with the same level of inputs (lower cost/unit)
Eg. Zambia has large reserves of copper ore  is better suited to produce copper for export
This is not main reason for international trade

2. Comparative Advantage
When a country can produce a good or service at a lower opportunity cost than another country
Even if absolute disadvantage exists for a country, it can still benefit its neighbours with trade by focusing on the good with a lower opportunity cost than theirs (they give up less than the other country)

3. Comparative Advantage & PPF
Corn 9
Because the PPF gradients are different, these two countries have different opportunity costs between Corn and Wheat they will trade!
**Opportunity cost = sacrifice/gain
Country X 6
Country Y 5 6
Wheat
The opp. cost of Country Y producing wheat is 6/5 (sacrifice over gain)
The opp. cost of Country X producing wheat is 9/6
So, Country X should do the wheat (lower opportunity cost)

4. Comparative Advantage & PPF
Corn
Because the PPF gradients are the same, these two countries have the same opportunity costs between Corn and Wheat they will not trade!
* Country X MAY have an absolute advantage, or it may just have more resources. 6
Country X 5
Country Y 5 6
Wheat

5. Comparative Advantage & Opportunity Cost
Wheat
Corn
Country A 5 10
Country B 4 2
Opportunity Costs:
For country A to gain 1 unit of wheat, they would give up 2 units of corn.
For country B to gain 1 unit of wheat, they would give up ½ unit of corn.
For country A to gain 1 unit of corn, they would give up ½ unit of wheat
For country B to gain 1 unit of corn, they would give up 2 units of wheat
Country A should produce corn and country B should produce wheat

6. Comparative Advantage & Opportunity Cost
Textiles
Cars
China 15 5
Japan 1 4
Opp. cost in China of 1 unit of textile is 1/3 car
Opp. cost in Japan of 1 unit of textile is 4 cars
Opp. cost in China of 1 car is 3 units of textile
Opp. cost in Japan of 1 car is 1/4 unit of textiles
China should produce textiles & Japan cars.