history of economic thought

[srabani nath]

Relevance of ricardian theory of comparitive cost advantage.

[duck]

Hi.. :)

In a two-country, two-good, one-factor Ricardian model, specialization in each country’s comparative advantage good can raise world output of both goods and by choosing an appropriate terms of trade, both countries can consume more of both goods relative to autarky.

Note: A country has a comparative advantage in the production of a good if it can produce that good at a lower opportunity cost relative to another country.