The birth of this nation was built upon the hands of individuals who came to this nation seeking a better life. It must have took a lot of courage to leave their homeland, families, and a country where for the most part was efficient and well established, but so many did to start anew. Upon arriving in this nation, it didn’t take long for the settlers to discover the abundance of resources available and to know that the abundance of resources/ goods were extremely valuable. As the states flourished, so too were the desire for specific resources, goods/ services. For this reason, this paper will explain the economic perspective of comparative/absolute advantage and how they economically impact decisions made in our nation. Comparative advantage, in economics , refers to the ability of one group or company to produce a good/ service more efficiently than another (Lipsey, R. G., & Dobson, W. 1987). Determining how efficient the goods/services are depends on how low the marginal and opportunity cost are in contrast to another company. To explore the concept of comparative advantage, we must first analyze the concept of marginal and opportunity cost. Marginal cost is the actual cost it takes to produce an additional good. For example, if a company producing additional televisions requires building a new warehouse, the marginal cost of the extra television, includes the cost of the new warehouse. Marginal cost may be effected by market failures. Market failures are the concept by which economist use to describe why the free market system doesn’t work efficiently (SalanieÌ, B. 2000). There are many factors which affect the marginal cost, which include negative and positive externalities. The term externality refers to the cos… … middle of paper … …ountries, in the sense that both countries have resources which undoubtedly, through trade, could benefit both countries. You still may be a little confused by the ideas of comparative/ absolute advantage, so, to sum up these ideas I will say they differ primarily in terms of the value either country has to consider when making decisions regarding goods/services. Like Mr. Lincoln needed to do when determining who should build his rails. I disagree with Mr. Lincoln because I have taken the time to understand the opportunity cost, and the advantages as well as disadvantages associated with trade, labor and the fundamentals of economics. In saying this, I do understand that it is those before me, such as Mr. Lincoln who I give gratitude to because now we are able learn from their mistakes as well as determine which economic decisions are most valuable for our nation.