Which economist proposed the theory of comparative advantage, arguing that countries should export what they can produce most efficiently and import what they cannot?

• A. David Ricardo
• B. Adam Smith
• C. Karl Marx
• D. John Maynard Keynes

Answer: (A)

Comparative advantage is about producing goods at the lowest opportunity cost relative to a trading partner and then trading to gain from specialization. David Ricardo formalized this idea, showing that trade can make all countries better off even if one country is more productive in every good. The crucial point isn’t who is more efficient overall, but whose costs of producing a good are lower in sacrificed alternatives. So a country should export the good for which its opportunity cost is lowest, and import the other good from another country with a lower opportunity cost for that good. This concept was illustrated with a simple two-good, two-country setup (often described with England and Portugal producing wine and cloth), demonstrating mutual gains from trade through specialization. That’s why Ricardo is credited with introducing comparative advantage.