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News Link • Economy - Economics USA

The Magic of Free Trade

• arclein

When we are free to trade, we are free to figure out the things we can produce at the lowest opportunity cost. This is David Ricardo's law of comparative advantage. It indicates that trade opportunities will exist between people and groups even when one side is absolutely more efficient at everything than the other side. (A $500-an-hour lawyer who is also an excellent typist will nevertheless hire a $10-an-hour typist because every hour the lawyer spends typing is an hour in which he could have made far more money lawyering.)

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