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JAMB Commerce 2003 Question 2

Question 2

Foreign Trade

An obstacle to international trade is

  1. A.trade imbalance between countries
  2. B.availability of local market
  3. C.quantity and quality of labour
  4. D.cost of finance
Show the answer and explanation

Answer: D (cost of finance)

Explanation

Financing foreign trade is expensive (letters of credit, insurance, exchange costs), and this high cost discourages international trade.