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Which of the following describes the reason for international trade

Commerce
WAEC 2010

Which of the following describes the reason for international trade

  • A. Balance of payment
  • B. Comparative cost advantage
  • C. Absolute cost advantage
  • D. Balance of trade
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Correct Answer: Option B
Explanation

Comparative advantage is an economic term that refers to an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners. Countries mainly enter into international trade to buy goods and services that they would normally produce at a higher cost compared to buying it from another country that is producing it a relatively low cost


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