Thursday, December 19, 2013

Absolute Advantages

8. International trade Adam Smith in the question of the international trade defended the Theory of the Absolute Advantages, that is, each country would have to be specialized in what it could produce the lesser costs. Thus, for example, if Portugal produced wine to a minimum cost of $80 and cereals to $90 a minimum price of and England produced wine to a minimum price of $90 and cereals to a minimum price of $80, Portugal must be specialized in the production of wine for the remain of the countries and buy of Portugal the Cereals. While England would have to specialize itself in the production of cereals, that possuam for them the lesser cost and to buy of Portugal the wine that would leave more cheap. Already David Ricardo defended the Theory of the Comparative Advantages, where each country would have to produce what he was cheaper for itself, independently to exist other countries that produced this good the lesser costs or not. For example, if Portugal produced wine the $70 and the $80 cereals and England produced wine the $100 and cereals the $90, Portugal would have to specialize in the production of wine and England in the production of cereals. We can perceive that the theory of Ricardo of the comparative advantages more is adjusted to the reality of the time that the theory of the advantages absolute of Smith, therefore in Smith a time that a country not possussenenhum product that could produce the lesser costs that all excessively, it would not have to be able of competition in the international market and also he would not have to be able of purchase of merchandises of other countries. Already the theory of Ricardo can more be had as adjusted because each country if specializes in what more cheap leaves it independently to exist other countries that can produce product the same the lesser costs.

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