a. The
two commodities two
commodities and all the countries
. each country then will specializes in the production of those commodities in
which enjoys comparative advantage and
export them to others and import the
required goods from others where they are available at a lower price
than at home.
b. The theory which was explained in terms of labour can also be
expressed in terms of money
specialization would take place on the basis of comparative advantage in terms
of money cost.
c.
The assumption of constant return to
scale and no charge in technology and production being subject to laws of returns, specialization will still take place
on the basis of cost advantage under increasing
and decreasing cost.
d. Assumption of no transport cost makes the
comparative advantage theory, it is argued very
unrealistic. It pointed out that
adding transport cost to the cost of production, each country
will produce those goods I which it will have cost advantages after adding transport cost, for
example India may no enjoy the cost
advantage for selling them in the nieghbouring countries.
e.
It is suggested that cost would not under go a
charge as the countries operate
with assumptions like full employment, perfect competition, static nature of the economy,
true trade and many other restrictive assumption