[amp_mcq option1=”David Ricardo” option2=”Adam Smith” option3=”James Mill” option4=”Thomas Mun” correct=”option2″]<\/p>\n
David Ricardo was the first person to state explicitly the Law of Comparative Costs. He did so in his book, “On the Principles of Political Economy and Taxation”, which was published in 1817.<\/p>\n
The Law of Comparative Costs states that a country will always benefit from trade, even if it is not the most efficient producer of all goods. This is because a country can specialize in producing the goods in which it has a comparative advantage, and then trade those goods for goods that it does not produce as efficiently.<\/p>\n
For example, let’s say that Country A is more efficient at producing wheat than Country B, and Country B is more efficient at producing cloth than Country A. However, Country A is still able to produce cloth more efficiently than Country B produces wheat. In this case, both countries would benefit from trade. Country A would specialize in producing wheat and trade some of its wheat for cloth from Country B. Country B would specialize in producing cloth and trade some of its cloth for wheat from Country A.<\/p>\n
The Law of Comparative Costs is one of the most important principles in international trade. It explains why countries trade with each other, even if one country is more efficient at producing all goods than the other country.<\/p>\n","protected":false},"excerpt":{"rendered":"
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