The classical theories of specialization and trade developed by Adam Smith and David Ricardo remain valid today in broad terms, but they suffer from several shortcomings, among which are
A) Some countries do not "play fair" in the way theorized and may still practice mercantilism to some extent.
B) Prices today are mainly set in a free and competitive marketplace, not in an administered price environment as envisioned in the models.
C) The theories assumed that only goods could cross international borders but today we know that many factors of productions such as labor, capital, and technology are internationally mobile as well.
D) All of the statements above are correct.
E) Only statements a and c are correct.
Correct Answer:
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