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Is opportunity cost a variable in Li Jia model?
In this model, the opportunity cost is variable.
In Ricardo's model, opportunity cost is indeed a variable. Opportunity cost refers to the highest value choice given up when making a choice. This concept plays an important role in Ricardo's comparative advantage theory. In Ricardo's theory, countries or enterprises will decide the mode of production and trade according to the opportunity cost.
If the opportunity cost of producing a commodity in a country is lower than that in other countries, then the country can realize its trade advantage by specialized production of this commodity. This is the basic viewpoint of the theory of comparative advantage.
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