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This stimulation also covers the theory of comparative advantage, the impact of quotas, tariff, and dumping, and the reasoning behind free trade agreements (FTAs).
Opportunity Costs and Comparative Advantage
Comparative advantage is dynamic and can change over time. Factors like improvements in technology, investment in research and development, change in quantity or quality of product, inflation, or import restrictions (tariffs and quotas) can change the comparative advantage of a country in comparison with another.
A country should specialize in the production and trade of commodities that it can produce at a lower opportunity cost with other countries...
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