John Stuart Mill was the founder of the ?
Correct answer: A. Theory of reciprocal demand
- A. Theory of reciprocal demand
- B. Theory of absolute advantage
- C. Theory of comarative advantage
- D. Theory of mercantilism
Explanation
John Stuart Mill developed the theory of reciprocal demand, which explains how international demand determines the terms of trade between countries. Absolute advantage is associated with Adam Smith, and comparative advantage with David Ricardo.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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