Question

Palladia specializes in the production of beef and produces beef more efficiently than any other country. It buys wheat, which it produces less efficiently than beef, from Rhodia, even though it produces wheat more efficiently than Rhodia. Which of the following theories of international trade supports Palladia's decision to buy wheat from Rhodia?A. The Samuelson critique

B. Mercantilism
C. Ricardo's theory of comparative advantage
D. Adam Smith's theory of absolute advantage
E. The Leontief paradox

Answer 1

C. Ricardo's theory of comparative advantage

Step-by-step explanation:

Comparative advantage -

It is a classical theory , given by Ricardo ,

According to this theory ,

The agents have an advantage over the others by producing a particular good when they have the capability to produce the good at a lower autarky price , is known as the theory of comparative advantage .

hence , same case is shown in the question , where Palladia's decides to buy wheat from Rhodia .

hence , the correct term fro the given statement is C. Ricardo's theory of comparative advantage .