Comparative Advantage Flashcards
Who is credited for the principles of comparative advantage to explain how it can be beneficial to two parties to trade to lower costs?
David Ricardo
What measures how much production of one good is reduced to produce one more unit of another good?
Opportunity cost
Who developed absolute advantage?
Adam Smith
One country can produce more output per unit of productive input than another under what principle?
Principle of absolute advantage
Comparative advantage was first described by who in 1815 in an essay on the Corn Laws?
Robert Torrens
The comparative advantage theory is attributed to whom?
David Ricardo
Who created a systematic explanation in his 1817 book on the Principles of Political Economy and Taxation?
David Ricardo
Ricardo’s theory required the assumption that capitalists were restricted to investing money in their _______ region.
Own
In a global economy where investments can easily move from one part of the world to another, __________ advantage is irrelevant and ____________ advantage determines investment.
Comparative
Absolute
The conclusion drawn from the theory is that a country should specialize in products and services in which they have a ____________ advantage.
Comparative
