In the Ricardian theory of international trade, comparative advantage arises primarily due to differences in which of the following factors between nations?

💡 Solution & Explanation

David Ricardo formulated the classical theory of comparative advantage based on international variations in labor productivity and technology, demonstrating that mutual gains from trade persist even with absolute cost disadvantages. Factor endowments form the basis of the later Heckscher-Ohlin model, distinguishing it from the Ricardian framework.