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Which of the following describes the reason for international trade?  

Commerce
JAMB 2025

Which of the following describes the reason for international trade?

 

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

International trade is primarily driven by the concept of comparative cost advantage. This economic theory suggests that
countries should specialize in producing goods for which they have a lower opportunity cost and trade for goods that other
countries produce at a lower opportunity cost. This allows for efficient use of resources and increases the total output and
consumption.


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