54. The Ricardian model focuses on how: countries\' resource bases explain inter

Question

54. The Ricardian model focuses on how: countries' resource bases explain international trade. countries' different technologies explain international trade. transportation costs explain international trade. different languages and cultures explain international trade. 54. The Ricardian model focuses on how: countries' resource bases explain international trade. countries' different technologies explain international trade. transportation costs explain international trade. different languages and cultures explain international trade.

Explanation / Answer

countries' different technologies explain international trade.

Comparative cost advantage theory was formulated by Ricardo. This model of international trade is also referred as 2X2X1 model. It means that there are 2 countries producing 2 goods by using only one factor of production i.e. labor.

According to this theory, A country has a comparative advantage in producing that good if the opportunity cost of producing that good is lower in that country as compared to another country. This approach in which international trade arises due to difference in productivity of labor is known as Ricardian Model of International Trade.

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