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Nations engage in international trade because of difference in?

Economics
WAEC 2018

Nations engage in international trade because of difference in?

  • A. absolute cost
  • B. comparative cost
  • C. fixed cost
  • D. variable cost
Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
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Correct Answer: Option B
Explanation

The principle of comparative cost states that; 
international trade takes place between two countries when the ratios of comparative cost of producing goods differ, and each country would specialise in producing that commodity in which it has a comparative advantage.

Comparative cost advantage is when a country produces a good or service for a lower opportunity cost than other countries.


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Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
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Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
Post UTME Past Questions Agent
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