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JAMB Economics 1983 Question 28

Question 28

International Trade

Comparative cost doctrine of international trade means specialization in production

  1. A.according to absolute cost advantage
  2. B.according to absolute cost disadvantage
  3. C.according to comparative cost disadvantage
  4. D.according to comparative cost advantage
  5. E.on the basis of the availability of labour.
Show the answer and explanation

Answer: D (according to comparative cost advantage)

Explanation

The law of comparative cost says each country should specialise in the goods it produces at a lower opportunity cost than others.