David Ricardo's simplified trade model is based on all of these assumptions EXCEPT
A) costs do not vary with the level of production.
B) the level of technology is fixed for all nations.
C) capital is the only factor of production.
D) perfect competition prevails in all markets.

Question

Quizplus · Accepted Answer

David Ricardo's model, known for illustrating the principle of comparative advantage, does not assume that capital is the only factor of production. Instead, it simplifies by not specifying the number or types of factors of production, focusing on the relative efficiency of producing goods between countries.

David Ricardo's Simplified Trade Model Is Based on All of These