ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -David Ricardo was an 18th-century English economist renowned for his contributions to economic theory. He developed the comparative advantage theory, labor theory of value, and the theory of rents, which have founded other schools of thought and form the basis of current economic policies and decisions.

Detailed explanation-2: -Adam Smith was an 18th-century philosopher renowned as the father of modern economics, and a major proponent of laissez-faire (non-interference from government) economic policies.

Detailed explanation-3: -In short, Ricardo was an early believer in the quantity theory of money, or what is known today as monetarism. In his Essay on the Influence of a Low Price of Corn on the Profits of Stock (1815), Ricardo articulated what came to be known as the law of diminishing marginal returns.

Detailed explanation-4: -comparative advantage, economic theory, first developed by 19th-century British economist David Ricardo, that attributed the cause and benefits of international trade to the differences in the relative opportunity costs (costs in terms of other goods given up) of producing the same commodities among countries.

Detailed explanation-5: -Ricardo advocates for embodied labour as the most effective approach in determining a commodity’s exchangeable value. On the contrary, Adam Smith emphasises the labour command theory of value. Furthermore, Ricardo’s arguments have led to the adoption of different dimensions that Smith did not consider in his argument.