Important Theories and terms Exams Tips

 difference between absolute and comparative cost theory 

 Absolute advantage focuses on producing more goods with the same resources or the same goods with fewer resources than another entity, while comparative advantage focuses on producing goods at a lower opportunity cost than another entity.  

 The founder of the theory of absolute cost advantage, also known as absolute advantage, is the Scottish economist Adam Smith, who introduced the concept in his 1776 book, "The Wealth of Nations". 

The product life cycle theory was developed by Raymond Vernon, a Harvard Business School professor, in the 1960s. 

David Ricardo, an 18th-century British political economist, developed the comparative cost advantage theory. He published his theory in his 1817 book The Principles of Political Economy and Taxation. Comparative advantage is an economic theory created by British economist David Ricardo in the 19th century. It argues that countries can benefit from trading with each other by focusing on making the things they are best at making, while buying the things they are not as good at making from other countries.

Opportunity cost is the value of the best alternative that is given up when choosing between multiple options. It's also known as an alternative cost.  Opportunity cost is money or benefits lost by not selecting a particular option during the decision-making process.

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