In the context of international trade, the theory of comparative advantage was propounded by:
A. David Ricardo
B. Paul Krugman
C. Heckscher and Ohlin
D. Adam Smith
Answer: Option A
Solution (By JKSSB Mock Tests)
David Ricardo developed the theory of comparative advantage, which states that countries should specialise in producing goods in which they have a lower opportunity cost.
Explanation:
The law of demand does not hold for Giffen goods (where income effect outweighs substitution effect) and Veblen goods (where higher price increases demand due to prestige value).
Explanation:
Absolute poverty is measured with reference to a fixed poverty line based on minimum calorie requirements or income needed to meet basic needs. Gini and Lorenz measure inequality (relative poverty aspects).
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