When Adam Smith presented his theory of absolute advantage, he assumed that all "value" in an economy was determined by and measured in terms of the _____ used in the production of the various goods.
A)area of land
B)labor hours
C)amount of physical capital
D)amount of money

Question

Quizplus · Accepted Answer

Adam Smith believed that the value of goods was determined by the amount of labor required to produce them. Therefore, he used labor hours as the unit of measure for value in his theory of absolute advantage.

When Adam Smith Presented His Theory of Absolute Advantage, He