The theory of absolute advantage developed by Adam Smith was based on the assumption that:
A) capital was the only factor of production.
B) labor was the only factor of production.
C) capital and labor were the only factors of production.
D) absolute advantage was a myth.
E) None of the above

Question

Quizplus · Accepted Answer

Adam Smith's theory of absolute advantage is based on the assumption that labor is the only factor of production, emphasizing that countries should specialize in the production of goods for which they have the most efficient production processes.

The Theory of Absolute Advantage Developed by Adam Smith Was