Friday, December 24, 2004

Macroeconomics II - Theory of Comparative Advantage

The Theory of Comparative Advantage

A very counter-intuitve concept. But very essential to appreciate International trade.

Just answer this question before you read the article :

"There are two countries A and B. And two products X and Y. Assume there are no other countries and no other products. If A is better in producing both X and Y, will it be beneficial for A to do trade with B ?"

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