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JAMB Economics 1983 Question 32

Question 32

International Trade

International trade is necessary because

  1. A.no country can live in economic isolation
  2. B.different countries are differently endowed in natural and man-made resources
  3. C.some countries have comparative costs advantage in the production of particular commodities over other countries
  4. D.the world demand for and supply of various categories of commodities is expanding very fast.
  5. E.countries want to build up their foreign exchange reserves.
Show the answer and explanation

Answer: B (different countries are differently endowed in natural and man-made resources)

Explanation

Countries have different natural and man-made resources, so none can produce everything it needs cheaply; this unequal endowment is the root reason for trade.