This term is known as Absolute advantage.
Absolute advantage is an economic concept that is used to refer to a party’s superior production capability. Specifically, it refers to the ability to produce a certain good or service at lower cost than another party.
The differentiation between the varying abilities of companies and nations to produce goods efficiently is the basis for the concept of absolute advantage. As such, absolute advantage looks at the efficiency of producing a single product. It also looks at how to produce goods and services at a lower cost by using fewer inputs during the production process when compared to the competition.
Absolute advantage analysis helps countries avoid producing goods and services that would yield little to no demand, which would ultimately lead to losses. A country’s absolute advantage in a particular industry can play an important role in the types of products it chooses to produce.
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