Absolute and Comparative Cost Advantage (HINDI)

Theory of Comparative Cost Advantage, given by Ricardo was a significant modification over Smith’s Theory of Absolute Cost Advantage. The Smith’s theory itself was a significant departure from the existing wisdom - Mercantilist’s, as it suggests when two nations trade both stand to gain. A nation that can produce a good-X cheaper than the other nation will produce and export to that nation the good-X and import from that nation the good that it produces costlier say good-Y. So both will gain from producing and exporting the good that they can produce cheaper. But according to this theory trade is not justified when one nation can produce both the good cheaper. Ricardo’s Comparative Advantage theory demonstrates that trade is still possible and gainful for both nations.
Ricard’s assertion is that each good involves ‘opportunity cost - sacrificing something to produce something. Since productive resource (labour) is fixed when a commodity is produced a certain amount of other commodities that could have been produced, gets sacrificed. So rather than producing a good whose opportunity cost is high, it is advisable to import it from the country where it can be produced with least opportunity cost. So nations should devote their productive resource to the production of a good that it can produce efficiently regardless of the fact that it can produce both goods cheaper or costlier than the other countries. Cost-effectiveness is measured in terms of labor - producing a unit of good with less amount of labor.
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Sir, Is there complete specialization or incomplete specialization????

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Sir, Is there complete specialization or incomplete specialization in Ricardian theory?

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37:39 Sir plz explain how do we arrive at this table. Will we be given the conditions in the question itself in order to construct it ?

[@pinkyyadav1760]

thankyou SIR,I have a doubt how does india decide that it will produce 3400 for trade ,why not 3600 or 4000 or any other no. and why is taiwan pruding 00ton wheat why not 10 ton or some othr unit,ye apne srf assume kiya h na ya koi maths h

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[@jayashkhandelwal2896]

Iss example me dono countries ne jo trade kiya, wo dono alag alag cost of production (labour force) se banegi
To iss theory me ye 1 factor nahi hai kya ki trade equal amount ka hona chahiye
Agar alag alag amount honge to 1 country agar pay kare to koi loss me jaa sakta hai
Ye 1 doubt sa hai

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Sir please explain ki aapne last mei 600 tonnes of wheat Kyu liya hai Taiwan ke case mei

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Can u share Adam's theory?

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Absolute and comparative ka matlab kya hota h sir

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Sir is this assumption same for Adam Smith's theory as well ?

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Assumptions in Smiths theory are same except that both countries have the absolute advantage in different goods. So they gain by exporting the good they can produce cheaper (with less amount of labour). Ricardo’s assertion is that it is still gainful for both the countries to trade even if one country has cost advantage over the other country in the production of both the goods.

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Sir please understand me about no transportation cost in detail

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9:50 assumptions of Ricardo's CCA Theory

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why india not produced only wheat in comparative advantage if they have more opportunity cost in wheat production like taiwan ( they use there Labour only computer production.

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Please find the IS-LM link: th-cam.com/video/6OQJIFe28bs/w-d-xo.html

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That was a great lecture. Thank you so much sir. Also, can someone please suggest me books for studying these theories or entire international trade for that matter?!

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You can try the International Economics books written by either Dominick Salvatore or Paul Krugman

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Discuss the comparative cost theory of international trade??

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This theory is co confusing that Sir is also getting Confused while describing it.

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