CA Foundation P4 · Chapter 9 · Question 2 of 15
The theory of absolute advantage as a basis for international trade was propounded by:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Adam Smith
Explanation
Adam Smith, in The Wealth of Nations (1776), argued that countries gain by specialising in goods they can produce with absolute advantage. David Ricardo developed comparative advantage, Heckscher and Ohlin the factor-endowment theory, and Krugman new trade theory.
More International Trade MCQs
- Q4According to the Heckscher-Ohlin theory, a labour-abundant country will:
- Q5An ad valorem import tariff of 15% is levied on a machine with an assessable value of Rs. 40,000. The tariff payable is:
- Q6Which of the following is a non-tariff measure?
- Q7In international trade, 'dumping' refers to:
- Q8The World Trade Organization (WTO), which replaced GATT, came into existence on: