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David Ricardo: 3 ideas worth knowing

3 ideas from David Ricardo, each explained in a minute and credited to the original work. Free on Savvy.

• A country can gain from trade even if it's worse at making everything

  David Ricardo showed that even if one country can produce every good more efficiently than another, both still gain by specialising: each should make whatever it gives up the least…

  — David Ricardo, On the Principles of Political Economy and Taxation

• Rent is the reward for owning better land than the worst land still worth farming

  When farmland grows scarce, cultivation spreads onto poorer soil. Ricardo showed that rent is simply the extra output the better land yields over that worst "marginal" plot still i…

  — David Ricardo, On the Principles of Political Economy and Taxation

• Trade can benefit both sides even if one country is worse at literally everything

  In 1817, David Ricardo showed that even if one country is more efficient at producing every good than another, both still gain from trade — each should specialize in whatever it's …

  — David Ricardo, On the Principles of Political Economy and Taxation

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