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Comparitive advantage and free trade

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Please answer specifically with details the following questions and for clarity, place my questions before each of your specific responses.

1. How does the "Concept of Comparative Advantage" actually "prove the advantages" of free trade to both countries involved in a transaction? Explain.

2. Are there economically justified reasons "to restrict" free trade? Explain.

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Solution Summary

Comparative advantage is always a strong argument in the favour of free trade, because as long as a country will have comparative advantage over other countries in even one good, which most of the countries always have, they will stand to benefit from free trade.

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1. How does the "Concept of Comparative Advantage" actually "prove the advantages" of free trade to both countries involved in a transaction? Explain.

Concept of comparative advantage indeed prove the advantages of free trade to both countries involved in a transaction. Comparative advantage is always a strong argument in the favour of free trade, because as long as a country will have comparative advantage over other countries in even one good, which most of the countries always have, they will stand to benefit from free trade.
The major advantages of free trade are that it drastically increases economic efficiency and production. But ...

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Sandeep Bardia, MBA
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  • MBA, Rochester Institute of Technology
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