International Trade Philosophy
Your essay should include the following:
Compare absolute advantage, comparative advantage, and the Ricardian model. Determine and argue which one of the philosophies is best for a nation state in terms of trade, and use sources to back up this claim.
The essay should be at least 500 words in length. This does not include references. You are required to use your textbook as source material for your response in addition to outside sources. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. The paper must be written using the APA style of writing.
Theory of Absolute Advantage
The theory of absolute advantage was developed by Adam Smith It was the first trade theory that indicated the importance of specialization in production and division of labor (kihc, 2002). If a nation is able to produce a good more efficiently than another nation, then was say that the nation has absolute advantage in the production of that good. If the nation produces the good in which it has absolute advantage, it is conducting advantageous trade by producing the good at lower cost or with higher productivity.
Theory of Comparative Advantage
If a nation is relatively more efficient in production of a good than another nation then we can say that the nation has comparative advantage in production of that good. This theory measures relative efficiency, i.e. with respect to other ...
Comparison of Absolute advantage, Comparative advantage and Ricardian Model