What is David Ricardo's theory?
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Overview of David Ricardo's Theory
David Ricardo is renowned for his contributions to economic theory, particularly the principles of comparative advantage and the labor theory of value. His comparative advantage theory posits that countries should specialize in the production of goods in which they have a lower opportunity cost, thus promoting global trade efficiency. Moreover, Ricardo's labor theory of value argues that the value of a good is primarily determined by the amount of labor required to produce it. These foundational ideas have significantly influenced modern economics and international trade practices.