Question

In Ricardo's theory of comparative advantage, the main source of comparative advantage is: 1. the labor-intensity of production 2. resource supplies 3. the capital-intensity of production 4. technology 5. human capital

Answer 1

Ricardo's theory of comparative advantage states that an individual will have comparative advantage in production of a good if his opportunity cost of producing that good is less than that of it's opponent's. The concept of opportunity cost comes from supply of resources which is fixed. Comparative advantage is therefore the ability of that individual to produce a good with less opportunity cost or lost benefits from the use of fixed resources in production of one good than another.

Answer: Resources supplies