The _____ analyzes trade under the assumption that opportunity costs are constant and therefore production possibility frontiers are straight lines.

Question

Quizplus · Accepted Answer

The Ricardian model is based on the assumption of constant opportunity costs and straight-line production possibility frontiers. It explains comparative advantage between countries and the gains from trade. The other models listed (pauper labor fallacy model, Heckscher-Ohlin model, oligopoly model) do not rely on these assumptions.

The _____ Analyzes Trade Under the Assumption That Opportunity Costs