Presented by:

Ahsan Khawaja
SAP ID:
57437
Program:
BS Healthcare Management
 TRADE :

Examining Trade through the

lens of David Ricardo
 Background info
David Ricardo (18 April 1772 – 11 September 1823)
He was a British political economist.
Several renowned books and articles related to
economics were written by him but the most
influential book was “Principles of Political
Economy and Taxation(1817)”.
The book "The Wealth of Nations(1776)" by
Adam Smith greatly influenced him.
Trade in general
Trade is the exchange of goods and services between individuals, businesses,
or countries for mutual benefit.
 David Ricardo’s Comparative Advantage
David Ricardo proposed “theory of Comparative Advantage”, which is
corelated as well as contrary to David Smith’s “theory of Absolute
Advantage”.
Comparative advantage is the ability of a country, individual, or entity to
produce a particular good or service at a lower opportunity cost compared
to another, allowing for mutually beneficial trade.

Trade & David Ricardo

So basically, making and then giving commodities to other country, individual
or entity a product which one can produce efficiently with less opportunity
cost is termed as Trade in David Ricardo’s point of view.
Example:

Commodities Wheat Potatoes

100 kg/hour 200 kg/hour

China
1 Wheat=2 Potatoes 1 Potato=0.5Wheat

80 kg/hour 100 kg/hour

India 1 Wheat=1.25 Potatoes 1 Potato=0.8 Wheat
Thank you for your
time and
consideration.