Because the Ricardian trade theory recognized only how supply conditions influence international prices, it could determine
A) the equilibrium terms of trade.
B) the outer limits for the terms of trade.
C) where a country chooses to locate along its production possibilities frontier.
D) where a country chooses to locate along its trade triangle.

Question

Quizplus · Accepted Answer

The Ricardian trade theory only considers supply conditions and their impact on international prices. Therefore, it can only determine the outer limits for the terms of trade, and not the equilibrium terms of trade or where a country chooses to locate along its production possibilities frontier or trade triangle.

Because the Ricardian Trade Theory Recognized Only How Supply Conditions