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JAMB Economics 1979 Question 10

Question 10

International Trade

The principle of comparative advantage or comparative cost is not based on one of the following assumptions:

  1. A.there are restrictions in trade
  2. B.there are no costs of transportation
  3. C.there is perfect competition
  4. D.there are no tariffs or import and export quota
  5. E.there are only two countries and only two commodities entering into international trade.
Show the answer and explanation

Answer: A (there are restrictions in trade)

Explanation

The theory assumes free trade, so 'there are restrictions in trade' is not one of its assumptions.