Results (
English) 2:
[Copy]Copied!
For example, if Country A can produce 500 units of the commodity in one day using 300 units of labor and Country B can produce 1000 units of the same commodity in a day using 300 units of labor, the latter is identified as having an absolute advantage over A and will be either when they import commodities from B, assuming each unit of production factors cost the same in both countries. Although profitable, this method may not be mutually beneficial for both countries which entered commercial relationships with one another. The theory of comparative advantage put forward by David Ricardo in 1817, states that the two sides of international trade can reap the benefits, and that it does not need to be in just one groove only (one country only importing and exporting only the others). The purpose of the two commodities for each country is to measure the opportunity cost of each each commodity in other respects. The key factor between Smith and Ricardo's theory difference is the absence and presence of the concept of opportunity cost, respectively, of the entire national product equation. While the absolute gains paving the way for economic domination by the country which holds the power to export more importing countries, the theory of comparative advantage where the two countries extends to exist and be mutually depend on each other for economic symbiotic relationship.
Being translated, please wait..
