10. Consider the following argument: "If your country can produce every good more efficiently than another...

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10. Consider the following argument: If your country can produce every good more efficiently than another country, there is no point in engaging in trade with the other country. In the context of the Ricardian model of trade, is this argument convincing? If it is, explain why. If not, explain why not.

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Answer 1

Answer #1

The statement is somehow true because if country has an absolute advantage in producing all goods it does not make sense to trade because of lower costs and effective process as well as economies of scale.

However as per Ricardian Theory, it is advisable to engage in trade if both countries have comparative advantage because either of them can produce good at lower opportunity cost and with better quality or standard

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Answer 2

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