Question

Ricardo explained the law of comparative advantage on the basis of:

• A. Opportunity Cost
• B. Law of Diminishing Returns
• C. Labour Theory of Value
• D. Economies of Scale

Hint:

Logic Tip: Ricardo used labour cost differences, while Haberler later explained comparative advantage through opportunity cost.

Answer 1

The Correct Option is C

Step 1:
David Ricardo explained international trade through comparative advantage.

Step 2:
Ricardo used the: \[ \boxed{\text{Labour Theory of Value}} \] to explain differences in production costs.

Step 3:
Opportunity cost approach was later developed by Haberler, not Ricardo.

Step 4:
Hence, the correct answer is: \[ \boxed{\text{(3) Labour Theory of Value}} \]