Question

Fallacy in comparative advantage theory of ricardo

Answer 1

First and foremost Ricardo comparative advantage  refers to a country's ability to produce goods and services at a low opportunity cost than that of its competitor (trade partners) so it gives a company the ability to sell good at a lower price than it competitor and realizes a strong sales margin but the irrelevance/ problem or fallacy i see in it is that if by producing something an industry can improve its long term ability to carry on producing it, then comparative advantage becomes irrelevant in the short term.