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Asked Jan 24, 2019
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Comparative and absolute advantage

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Step 1

Absolute advantage and comparative advantage are the earliest theories in international trade. Theory of absolute advantage was given by Adam Smith and the theory comparative advanatage was given by David Ricardo.

Step 2

Absolute advantage states that a country has an absolute advantage in production of a commodity, if it uses lesser resources to produce a particular good. Smith believed that since the resources are no...

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