Adam Smith
A) Was a leading advocate of free trade
B) Developed the concept of absolute advantage
C) Maintained that labor costs represent the major determinant of production cost
D) All of the above

Question

Quizplus · Accepted Answer

All three statements are true. Adam Smith was a leading advocate of free trade and argued that countries should specialize in producing goods in which they have an absolute advantage, and trade with other countries through the law of comparative advantage. Additionally, Smith believed that labor costs represent the major determinant of production costs, and that the division of labor facilitates economic growth and improves productivity.