Can you spot the seven errors in the following passage? (Ignore grammatical mistakes!)
The chapter then goes on to give a theoretical explanation of why it is to the advantage of all countries to become self-sufficient. It looks first at Alfred Marshall’s theory of absolute advantage which simply suggests that a nation should specialize at what it does best because it will be able to sell those products at much higher prices than can other nations. Next, it introduces Adam Smith’s very important refinement of Marshall’s idea: the theory of comparative advantage. It explains why it is to the advantage of all countries to trade. It shows by way of the terms of trade possibilities curve why it is differences in wage rates which lie at the heart of trade.
The chapter then goes on to give a theoretical explanation of why it is to the advantage of all countries to become self-sufficient (trade). It looks first at Alfred Marshall’s (Adam Smith’s) theory of absolute advantage which simply suggests that a nation should specialize at what it does best because it will be able to sell those products at much higher (lower) prices than can other nations. Next, it introduces Adam Smith’s (David Ricardo’s) very important refinement of Marshall’s Smith’s idea: the theory of comparative advantage. It explains why it is to the advantage of all countries to trade. It shows by way of the terms of trade (production or trading) possibilities curve why it is differences in wage rates (comparative costs) which lie at the heart of trade.
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