FTP, name this theory which shows that two countries can achieve greater total efficiency by each specializing in certain goods, even if one country has an absolute advantage in the production of all goods.
The classical conception of this phenomenon presupposes that labor is the only factor of production, there are no transport costs, and there is full employment. Because it implies that technological superiority is not a guarantee to continued success of a business, it is used to show how third-world countries can compete in the free market. First described by Robert Torrens in his Essay on the External Corn Trade, it was explored mathematically using the example of English cloth and Portuguese wine in On the Principles of Political Economy and Taxation by David Ricardo. FTP, name this theory which shows that two countries can achieve greater total efficiency by each specializing in certain goods, even if one country has an absolute advantage in the production of all goods.
The classical conception of this phenomenon presupposes that labor is the only factor of production, there are no transport costs, and there is full employment.
comparative advantage