advantage. Absolute advantage is about productivity—how long does it take to produce a unit of a good. Comparative advantage is about opportunity cost—how much of some other good must be forgone to produce a unit of a good.

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EYE on the U.S. ECONOMY No One Knows How to Make a Pencil Not many products in today’s world are as simple as a pencil.

Yet the story of how the pencil in your hand got there illustrates the astonishing power of specialization and trade.