Nations engage in international trade because o... - WAEC Economics 2018 Question
Nations engage in international trade because of difference in?
A
absolute cost
B
comparative cost
C
fixed cost
D
variable cost
correct option: b
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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