Who propounded the comparative cost analysis theory of international trade?
The classical theory of International Trade is popularly known as the Theory of Comparative Costs or Advantage. It was formulated by
comparative advantage, economic theory, first developed by 19th-century British economist David Ricardo, that attributed the cause and benefits of international trade to the differences in the relative opportunity costs (costs in terms of other goods given up) of producing the same commodities among countries.
The comparative cost theory explained that different countries would specialise in the production of goods on the basis of comparative costs and that they would gain from trade if they export those goods in which they have comparative advantage and import those goods from abroad in respect of which other countries ...
David Ricardo was an 18th-century English economist renowned for his contributions to economic theory. He developed the comparative advantage theory, labor theory of value, and the theory of rents, which have founded other schools of thought and form the basis of current economic policies and decisions.
The principle of comparative cost states that (a) international trade takes place between two countries when the ratios of comparative cost of producing goods differ, and (b) each country would specialise in producing that commodity in which it has a comparative advantage.
Comparative costs analysis means an examination of all direct and indirect costs to the state and an examination of the effect of a proposed privatization contract on the public health and safety of residents of the state who may utilize such privatized service.
Ricardo's theories of wages and profits
He said in his Essay on Profits, "Profits depend on high or low wages, wages on the price of necessaries, and the price of necessaries chiefly on the price of food."
This concept of TOT was introduced in the literature by J. S. Mill by introducing the concept of reciprocal demand. By reciprocal demand we mean demand of each country for the other's goods. On the basis of the principle of reciprocal demand, Mill determined a final TOT at which trade between two nations takes place.
Developed in the sixteenth century, mercantilism was one of the earliest efforts to develop an economic theory. This theory stated that a country's wealth was determined by the amount of its gold and silver holdings.
Important modifications in the theory of comparative cost were made by J.S. Mill, Tausig, Haberler and Ohlin. 1.
Who is the father of international trade?
In the early 1900s, a theory of international trade was developed by two Swedish economists, Eli Heckscher and Bertil Ohlin.
Adam Smith is known primarily for a single work—An Inquiry into the Nature and Causes of the Wealth of Nations (1776), the first comprehensive system of political economy—which included Smith's description of a system of market-determined wages and free rather than government-constrained enterprise, his system of “ ...
New trade theory (NTT) is a collection of economic models in international trade theory which focuses on the role of increasing returns to scale and network effects, which were originally developed in the late 1970s and early 1980s.
Option A is the correct answer. Comparative cost theory is static theory because it assumes there is no qualitative and quantitative change in inputs.
Alfred Marshall was one of the most influential economists of the late 19th and early 20th centuries. His book, Principles of Economics, was published in 1890 and quickly became a dominant economic and mathematical textbook in England. It is still used today in classrooms around the world.
Most consider Scottish economist Adam Smith the progenitor of classical economic theory.
Malthus and Ricardo apparently met around 1813 in a dispute over the "corn laws," a protectionist policy of import tariffs and export subsidies that sought to benefit English farmers. Ricardo was opposed; Malthus was in favor.
Krugman was President of the Eastern Economic Association in 2010, and is among the most influential economists in the world. He is known in academia for his work on international economics (including trade theory and international finance), economic geography, liquidity traps, and currency crises.
3. Ricardo's Theory of Comparative Cost Advantage. David Ricardo , the British economist in his 'Principles of Political Economy and Taxation' published in 1817, formulated a systematic theory called 'Comparative Cost Theory'.
Important modifications in the theory of comparative cost were made by J.S. Mill, Tausig, Haberler and Ohlin. 1.
What is comparative cost advantage in international trade?
In economics, a comparative advantage occurs when a country can produce a good or service at a lower opportunity cost than another country.
New trade theory was Krugman's explanation for why countries continued to produce things that they did not have a comparative advantage to produce. Krugman suggested there are two reasons that the idea of comparative advantage didn't represent reality.
Although aspects of trade with increasing returns had been worked out earlier, especially in work by Avinash Dixit, new trade theory is associated with Paul Krugman's work in the late 1970s, developing into what is known as the Dixit-Stiglitz-Krugman trade model and the Helpman–Krugman model.
| Amartya Sen | |
|---|---|
| Field | Welfare economics Social choice theory Development economics |
| School or tradition | Capability approach |
| Alma mater | University of Calcutta (BA) Trinity College, Cambridge (BA, MA, PhD) |
Although mercantilism is one of the oldest trade theories, it remains part of modern thinking.
International trade has a rich history starting with barter system being replaced by Mercantilism in the 16th and 17th Centuries. The 18th Century saw the shift towards liberalism.
Solution. Mercantilism Theory is the oldest International Trade theory.
