Absolute Advantage Theory

The Theory of Comparative Advantage - Given by David Ricardo

Background of the Theory ,[object Object],[object Object],[object Object]

Ricardo’s Idea of Comparative Advantage ,[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],Ricardo’s Idea of Comparative Advantage

Assumptions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Assumptions ,[object Object],[object Object],[object Object]

Ricardo’s numerical example ,[object Object],[object Object],[object Object]

Table-1 15 10 Portugal 30 15 England Cost Per Unit In Man Hours Cost Per Unit In Man Hours Wine Wheat Country

Ricardo’s numerical example ,[object Object]

Table-2 T o t a l P o r t u g a l E n g l a n d C o u n t r y Production Wine Wheat Wine Wheat After Trade Before Trade 12 18 11 17 12 0 6 9 0 18 5 8

Interpreting the Theory of Comparative Advantage ,[object Object],[object Object]

Interpreting the Theory of Comparative Advantage ,[object Object],[object Object],[object Object]

Interpreting the Theory of Comparative Advantage ,[object Object]

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