Question

What does the Ricardian Theory state?

A.
countries should produce all goods and services if they can
B.
countries should not produce goods and services that minimize opportunity costs
C.
countries should import goods and services if they are cheaper in other countries
D.
countries should export all goods and services if they make a profit

Answer 1

The answer is "countries should not produce goods and services that minimize opportunity costs."

Answer 2

The Ricardian theory states that countries should import goods and services if they are cheaper in other countries.

Answer: Option C

Explanation:

David Ricardo, through his theory of comparative advantage, brought to the light the marginal advantages of exporting certain commodities rather than attempting to produce them within the economy.

He clarified how it would be beneficial for the economy to export goods that require more input in order to indigenous produce it. He emphasized on the cost-benefit ratio in his proposition and concluded by stating that it is rather profitable to export goods that may take input worth more than its export price.