Adam Smith's theory of absolute advantage is based on the labor theory of value.

Name: Adam Smith's theory of absolute advantage is based on the labor theory of value.
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Adam Smith believed that a country should specialize in producing goods that it can produce more efficiently or with lower opportunity costs than other countries. He believed that labor was the primary source of value and thus countries should produce goods where they possess absolute advantage in labor productivity.

Adam Smith's Theory of Absolute Advantage Is Based on the Labor