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    Question

    The theory of comparative advantage in a two−country,

    two−commodity world can only work if 
    A Labour is not mobile and capital are mobile Correct Answer Incorrect Answer
    B Labour is mobile and capital is not mobile Correct Answer Incorrect Answer
    C Both capital and labour are mobile Correct Answer Incorrect Answer
    D Both capital and labour are not mobile Correct Answer Incorrect Answer

    Solution

    The theory of comparative advantage was given by Ricardo. This theory assumes that there is only one factor of production, i.e., labour and that it is perfectly mobile in the domestic market and immobile in the international market. 

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