The British economist G.MacDougall compared the labor productivity ratios and export ratios for the United Kingdom and the United States in order to test
A) Adam Smith's principle of absolute advantage.
B) David Hume's price specie flow mechanism.
C) David Ricardo's principle of comparative advantage.
D) William Benoit's theory of mercantilism.

Question

Quizplus · Accepted Answer

The comparison of labor productivity ratios and export ratios between two countries is a test of David Ricardo's principle of comparative advantage. This is because the principle argues that countries should specialize in producing and exporting goods that they can produce at a lower opportunity cost than other countries, based on their relative productivity ratios. Therefore, the test conducted by G.MacDougall is a test of the validity of the comparative advantage principle.

The British Economist G