Discussion Post: Comparative Advantage & the Gains from Trade
Adam Smith, in his book The Wealth of Nations (1776), suggested a basis of trade, which is known as an absolute advantage. Later, David Ricardo provided a modified framework, known as a comparative advantage, which became the basis of modern views of international trade. What are the differences between an absolute advantage and a comparative advantage? Why is a comparative advantage more important than an absolute advantage in explaining international trade? What are the causes of a comparative advantage? What are the gains from trade due to a comparative advantage? Discuss in detail.
The response should include a reference list. One-inch margins, Using Times New Roman 12 pnt font, double-space and APA style of writing and citations.