Please answer shortly for following 4 questions. "Under the assumption of the Ricardian Model with 2 goods:
Can one country have a comparative advantage in producing both goods?
Even if one counties can produce both products at lower cost
it is the differential in production costs of one in terms of the other that provides competitive advantage. Because England can produce cloth relatively more easily than wine it is to the advantage of both counties that Portugal produce all the wine and England all the cloth and that they trade with each other so England at the cost of a relatively small amount of it potential cloth production can have wine.
Can one country have an absolute advantage in producing both goods?"
It is entirely possible that one country would have a absolute advantage in the production of both goods. Ricardo uses the example of cloth and wine in Portugal and the UK. In his example Portugal has a competitive advantage in both, but the difference between the two products in Portugal is small. In his example Portugal can produce both at a lower labor cost than England. Because the difficulty of producing wine in England is significant, it is clearly beneficial to devote all the available resources to cloth production and use some of the resulting cloth to exchange for Portugal's easily produced wine. This allows both countries to consume more of both cloth and wine that either could provide independently.
True of False: In a Ricardian world, even if two countries have identical taste, there is still a basis for mutually beneficial trade if the two countries have different factor endowments and technology."
As the question is presented the answer is True. If there are different factor endowments and technology obviously the tastes of the countries may influence the amount of each product consumed per person, but this has nothing to do with comparative adv
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