Which of the following is NOT an assumption of Comparative Cost Advantage Theory?
A)Perfect Competition
B)Increasing return to scale
C)Perfect Mobility of labor within countries
D)Homogenoeus labor

Question

Quizplus · Accepted Answer

The Comparative Cost Advantage Theory, primarily developed by David Ricardo, does not assume increasing returns to scale. Instead, it operates under the assumption of constant returns to scale, where the output increases in direct proportion to the increase in inputs. The theory's other assumptions include perfect competition, perfect mobility of labor within countries, and homogeneous labor, making option B the correct choice as it is not an assumption of the theory.

Which of the Following Is NOT an Assumption of Comparative