David Ricardo’s theory of comparative advantage explains international trade in terms of the following: A. late‑mover advantage that certain countries and firms possess B. varying proportions in the factors of production C. number of firms that the world market can support D. differences in productivity
David Ricardo’s theory of comparative advantage explains international trade in terms of…
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The correct answer is D. differences in productivity.
David Ricardo’s theory of comparative advantage suggests that countries can benefit from trade by specializing in the production of goods for which they have a relative efficiency or lower opportunity cost compared to other countries. This means that by focusing on what they can produce most efficiently, countries can trade with one another to maximize their overall economic productivity and benefit from each other’s strengths.