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It suggests that the governing principle of international trade is based on the comparative and not the absolute advantage of prices. If a certain good of a country fetches a better price in another than in the home country then that country is said to have a comparative advantage in producing that good. Thus according to the theory a country may actually gain by trading even those goods which its trading partner can produce cheaper. Thus if each country specializes in producing those goods in which it has a comparative advantage then more goods will be produced and consequently the wealth of both the buying and selling nation increases...
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