Question
What is the core logic of the Ricardian model of trade?
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Answer
Trade arises from labor-productivity differences across countries.
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Question
What is a key limitation of the Ricardian trade model?
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Answer
It ignores capital and is a single-factor model.
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Question
When comparing two countries, what reveals comparative advantage?
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Answer
The country with the lower opportunity cost.
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Question
How does comparative advantage differ from absolute advantage in trade theory?
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Answer
Comparative uses lower opportunity cost; absolute uses higher productivity.
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