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There are only two countries, say A and B
They produce the same commodities X and Y
Tastes are similar in both countries
Labour was considered the only productive factor
The labour units of all the countries they deemed of equal productivity and homogeneity
Production was subject to the law of constant returns or cost
The factors of production are completely mobile within the country and are immobile beyond the country
It assumes the state of full employment
The theory 'Laissez Faire'has been assumed to be applied to international trade. The inter national trade was assumed to be free from all the obstacles and barriers.
Technological knowledge is unchanged
The inter national market is perfect so that the exchange ratio for the two commodities is the same.
The total cost of goods is the production cost only. This ignores the transportation cost
The principle of the quantity theory of money was assumed to be applied to both the countries.
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What is the modern theory of international trade?
The modern theory of international trade works on assumptions of the law of comparative advantage. The comparative advantage arises as a result of differences in the various regions.
What is the Assumption of absolute cost advantage?
what are the assumptions of the absolute advantage cost?
What is the application for the principle of international trade?
comparative cost advantage
Difference between absolute cost advantage theory and comparative cost advantage theory?
absolute cost advantage talks about the efficiency and cheaply a country incure in the production of goods and services against other country whiles comparative advantage talks about the opotunity cost of goods
Which describes comparative advantage?
Existence of lower opportunity cost then competitors
What is the modern theory of international trade?
The modern theory of international trade works on assumptions of the law of comparative advantage. The comparative advantage arises as a result of differences in the various regions.
What is the Assumption of absolute cost advantage?
what are the assumptions of the absolute advantage cost?
What are the assumptions inherent in production setup costs ordering cost and carrying cost?
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What is the comparative capital and maintenance costs of a solar power plant?
what is the comparative capital and maintainance cost of a solar
What document lays out the specifications and assumptions to be used in preparing all estimates of a program's cost?
The document that lays out the specifications and assumptions to be used in preparing all estimates of a program's cost is known as the: Cost Analysis Requirements Description (CARD)
What is the application for the principle of international trade?
comparative cost advantage
What Comparative advantage?
A country has comparative advantage if it can produce a good for less cost than any other nation. (study island)A comparative advantage is the condition that exists when someone can produce a good or service at a lower opportunity cost than someone else.
Difference between absolute cost advantage theory and comparative cost advantage theory?
absolute cost advantage talks about the efficiency and cheaply a country incure in the production of goods and services against other country whiles comparative advantage talks about the opotunity cost of goods
What are the comparative capital and maintenance cost in geothermal?
ewan ko saiyo!
Which describes comparative advantage?
Existence of lower opportunity cost then competitors
How is a comparative advantage obtained?
by producing a product with a lower opportunity cost
What is the ability to produce a good or service at a lower opportunity cost than other producers incur is known as?
Comparative Advantage.
