The ability of an economic actor (an individual, a household or a firm) to produce some particular good or service with a smaller total input of economic resources (labor, capital, land, etc.) per unit of output than other economic actors. In analyzing the theory of trade and economic specialization, it is important to distinguish absolute from comparative advantage, since it is comparative advantage that determines the potential welfare gains from specialization and trade, and not absolute advantage. [See also: comparative advantage]