Explain David Ricardo’s theory of comparative advantage. How does comparative advantage differ from absolute advantage?

Question 1

 

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Explain David Ricardo’s theory of comparative advantage. How does comparative advantage differ from absolute advantage? What is the relationship between comparative advantage and gains from trade?

Your response should be at least 500 words in length.

 

Question 2

 

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Explain the theory of external economies and their resulting impact upon international imports and exports. What are some underlying assumptions behind this theory and why are these assumptions important in international trade?

Your response should be at least 200 words in length

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