Specialisation And Comparative Advantage

Question 1

What are 3 disadvantages of comparative advantage and specialisation?

Answer 1

• can lead to over dependency on one good or service
• some countries may specialise in low value goods
• ignores transportation costs or tariffs which may cancel out a country’s comparative advantage

Question 2

What is the law if comparative advantage?

Answer 2

There are gains from trade when countries specialise in goods in Whig they have a comparative advantage