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Comparative advantage David Ricardo’s Trade Theory
Posted by mjmedlock on March 17, 2011 in international economics | ∞
Absolute Advantage To understand comparative advantage we first need to understand absolute advantage. Absolute advantage in the production of a good means that you can produce more of the good with a given amount of a production factor. The factor that we usually use in Ricardian trade theory is labour. Country Widgets per hour […]
Comparative Advantage And Trade
Posted by mjmedlock on March 16, 2011 in international economics | ∞
Comparative advantage is a critically important concept to understand when talking about trade, and especially when you want to show doubters the potential benefits of free trade. I’ve found this very good video explaining the principle of comparative advantage. It’s both entertaining and enlightening and saves me the trouble of recording my own explanation! I’ll […]