The focus of the Ricardian model is on how differences in _________
Influence international trade patterns.
A)demand
B)comparative costs
C)absolute costs
D)transportation costs

Question

Quizplus · Accepted Answer

The Ricardian model focuses on comparative costs, which refer to the relative efficiency with which countries can produce goods. This concept is crucial in determining trade patterns, as countries tend to specialize in the production of goods in which they have a comparative advantage and then trade with other countries for goods in which they do not have a comparative advantage. Differences in absolute costs, transportation costs, and even demand can also impact trade patterns, but the Ricardian model specifically highlights comparative costs as the main driver of international trade.

The Focus of the Ricardian Model Is on How Differences