Unlike Adam Smith,David Ricardo's trading principle emphasizes the:
A) Demand side of the market
B) Supply side of the market
C) Role of comparative costs
D) Role of absolute costs

Question

Quizplus · Accepted Answer

David Ricardo's trading principle emphasizes the role of comparative costs, which refers to the concept of producing goods where the opportunity cost is lowest, regardless of the absolute cost of production. This principle is also known as the theory of comparative advantage, and it suggests that countries should specialize in producing goods for which they have a lower opportunity cost and trade with other countries for goods in which they have a higher opportunity cost. This principle is based on the idea that specialization and trade can increase the overall welfare of all countries involved, as each country can benefit from producing and consuming goods that they are relatively more efficient at producing.

Unlike Adam Smith,David Ricardo's Trading Principle Emphasizes The