In the Ricardian model a country has a comparative advantage

In the Ricardian model, a country has a comparative advantage in a good if it has ________ relative to its trading partner

greater factor intensity

2) In the Ricardian model, absolute advantage is defined as

Solution

Q 1. .Option C.

Low opportunity cost.

The patterns of trade between two countries can be determined by comparing their respective opportunity cost of producing two goods.

The opportunity cost of one good is reciprocal of opportunity cost of another good.

Therefore a country will have a comparitive advantage in the production of a good if it has a lower opportunity cost compared to its trading partner.

For example let England has the comparitive advantage in production of clothing while

Portugal has comparitive advantage in producing wine.

Both these countries are trading partners of each other.

Therefore if England has the lower opportunity cost of producing cloth, then Portugal must certainly have a lower opportunity cost of producing wine.

Q2 .Option D.

Having higher relatively labor productivity.

Labor productivity is the quantity of out put that can be produced with a unit of labor.

According to Ricardian model,a country is said to have absolute advantage in terms of labor productivity of a good

relative to another country.

It can produce the good at lower cost labor or with higher productivity.

It is said to have absolute advantage if it uses fewer labor resources to produce a good than another country.