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    Dagger Santin
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    The document discusses the bases of international trade, including price differences, technical differences, and the distribution of natural resources. It introduces economist David Ricardo and his theory of comparative advantage, which holds that an economy has a comparative advantage in producing goods or services with a lower opportunity cost than its trading partners. The document provides David Ricardo's model comparing the time it takes Portugal and England to produce wine and cloth, and defines the law of absolute advantage as when a producer can make a good or service at a lower cost than other producers.

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    The document discusses the bases of international trade, including price differences, technical differences, and the distribution of natural resources. It introduces economist David Ricardo and his theory of comparative advantage, which holds that an economy has a comparative advantage in producing goods or services with a lower opportunity cost than its trading partners. The document provides David Ricardo's model comparing the time it takes Portugal and England to produce wine and cloth, and defines the law of absolute advantage as when a producer can make a good or service at a lower cost than other producers.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    4 views1 page

    Ita 2

    Uploaded by

    Dagger Santin
    The document discusses the bases of international trade, including price differences, technical differences, and the distribution of natural resources. It introduces economist David Ricardo and his theory of comparative advantage, which holds that an economy has a comparative advantage in producing goods or services with a lower opportunity cost than its trading partners. The document provides David Ricardo's model comparing the time it takes Portugal and England to produce wine and cloth, and defines the law of absolute advantage as when a producer can make a good or service at a lower cost than other producers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Bases of International Trade

    - Price Differences
    - Technical Differences
    - Distribution of Natural Resources

    David Ricardo

    - Economist
    - Theory of Comparative Advantage

    Comparative Advantage

    - Is an economy’s ability to produce a particular good or service at a lower


    opportunity cost than its trading partners.

    David Ricardo’s Model

    Country Wine Cloth

    Portugal 80days 90 days

    England 120 days 200 days

    Law of Absolute Advantage

    - When a producer can produce a good or service in greater quantity for the
    same cost, or the same quantity at lower cost, than other producers.

    Philippines Japan

    Rice (tons/labor) 8 5

    Sugar (tons/labor) 8 7

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