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JAMB Economics 1980 Question 13

Question 13

International Trade

International trade arises because

  1. A.one country has more abundant resources than the other country
  2. B.one country has the technology to produce the commodity whilst the other has not
  3. C.one country has the maximum comparative advantage or minimum comparative disadvantage in the production of a commodity over the other country
  4. D.one country has more manpower to produce the commodity than the other country
  5. E.all of the above.
Show the answer and explanation

Answer: E (all of the above.)

Explanation

Countries trade because they differ in resources, skills and technology, which gives each a comparative advantage in some goods.