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International Trade and Finance

Notes 3.6 Review Questions

1. Discuss comparative advantage model of Ricardo.
2. What is absolute advantage? Discuss.
3. Write a short note on the opportunity cost and the pure theory of trade.
Answers: Self-Assessment
1. (i)(c) (ii)(b) (iii)(b)
(iv)(d) (v)(a) (vi)(a)
3.7 Further Readings

1. Debreu, G. (1951) : “The coefficient of resource utilization,” Econometrica, 19,
273–292.
2. Dominguez, D. (2006) : “Lower bounds and recursive methods for the problem
of adjudicating conflicting claims,” mimeo.
3. Foley, D. (1967) : “Resource allocation and the public sector,” Yale Economic Essays,
7, 45–98.
4. Kalai, E. (1977) : “Proportional solutions to bargaining situations : interpersonal
utility comparisons,” Econometrica, 45, 1623–1630.

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