Question

Among the following theories of international trade, which one is the oldest?

• A. Theory of Absolute Advantage
• B. Mercantilist Doctrine
• C. Factor Proportions Theory
• D. Theory of Comparative Advantage

Hint:

Mercantilism focused on accumulation of gold and trade surplus, predating classical trade theories.

Answer 1

The Correct Option is B

Step 1: Review the historical progression of trade theories.
The theories, in chronological order, are:
- Mercantilist Doctrine (16th–18th century): The earliest trade theory.
- Absolute Advantage: Introduced by Adam Smith in 1776.
- Comparative Advantage: Developed by David Ricardo in 1817.
- Factor Proportions: The Heckscher-Ohlin theory, from the 20th century.