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JAMB Commerce 2012 Question 8

Question 8

Foreign Trade

The basis for international trade is embedded in the principle of

  1. A.absolute advantage
  2. B.globalization
  3. C.deregulation
  4. D.comparative advantage.
Show the answer and explanation

Answer: D (comparative advantage.)

Explanation

Countries gain by specialising in what they produce at the lowest opportunity cost: comparative advantage.