Final answer:
The theory of comparative advantage and the theory of intra-industry trade are two theories of trade that can be compared and contrasted.
Step-by-step explanation:
The theory of comparative advantage and the theory of intra-industry trade are two theories of trade that can be compared and contrasted. The theory of comparative advantage suggests that economies should specialize in the production of goods they can produce at a lower opportunity cost, and then trade with other countries to obtain goods they cannot produce efficiently. On the other hand, the theory of intra-industry trade refers to the trade of goods within the same industry between countries. It occurs when countries engage in both exporting and importing goods in the same industry.
Comparing these theories, the theory of comparative advantage focuses on countries specializing in the production of a limited range of goods, while the theory of intra-industry trade suggests that countries can both import and export goods within the same industry. Another contrast is that the theory of comparative advantage emphasizes the importance of differences in opportunity costs of production, while the theory of intra-industry trade focuses on the similarities between economies in terms of income level and industrial development.