IMPORTANT OF COMPARATIVE THEORY


1. The two commodities two countries model can be extended  all  the commodities and all the countries. Each country then will specializes in the production of those commodities in which the 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.

2. The theory which was explained in terms of labour can also be expressed in terms of money as it is possible to express the total coast in terms of money. Specialization would take place on the basis of
comparative advantage in terms of money cost.

3. The assumption of constant returns to scale and no change in technology can also be relaxed. With changes 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. 

4. It is suggested that cost would not undergo a change as the countries operate with assumptions like full  employment perfect  competition, static nature of the economy , free trade and many of  her restrictive assumption.

The supporter of Ricordain theory argued that all the restricted assumptions of the comparative cost theory could be relaxed and make the theory practical in the real world situation where each country specializes in the production of these goods and services in which it has comparative cost advantage under the changing conditions.
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