Given below are two statements: Assertion A: According to Ricardo's theory a country can benefits from trade even if it has an absolute disadvantage in the production of all the goods. Reason R: What matters for trade is comparative advantage which depends on relative not absolute cost differences. In the light of the above statements, choose the most appropriate answer.
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Theories of international trade has come up 151 times in 6 exams since 2006.
This question is on Absolute and comparative advantage, part of Theories of international trade in International Economics.
Why countries trade: producing more cheaply in absolute terms, or at lower opportunity cost.
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Question from the CUET-PG 2026 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.