According to the principle of comparative advantage, - countries should specialize in the production of goods for which they use more resources than their trading partners - countries with a comparative advantage in the production of every good need not specialize - countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners - countries should specialize in the production of goods for which they use fewer resources than their trading partners

Q: Difference of Heckscher Ohlin Theorem from Comparative advantage theory?

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A: Answer: Given:

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Q: Differentiate between the following terms. Absolute advantage and comparative advantage.

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Q: Q1) Identify and categories the FIVE limitations to the theory of comparative advantage.

A: Comparative advantage theory was given my famous economist David Ricardo.

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.