Abstract: Ricardo’s comparative advantage theory, which explains the competitive power of industries with relative prices of products, is not easy to understand. The author “translates” the relative price model of the comparative advantage theory into the absolute price model, not only to make the theory easier to understand, but also to point out a blind spot in the relative price model, and to illustrate how a country in which prices of all goods are absolutely expensive can manage to restore its actual comparative advantage through painful recession, adjustments among industries and price declining -- the so--called “surviving from the fire mechanism”. In this way a classical type of solution for the European debt crisis can be found. Furthermore, Ricardo’s “big country--small country model” can be expanded to explain why the marginal revenue of China’s and other East Asian countries’ export--oriented economy is decreasing.

Key words: Ricardo, comparative advantage, European debt crisis, China’s export-oriented economy