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JAMB Economics 1999 Question 48

Question 48

International Trade

Gains from trade depends on

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

Answer: A (comparative advantage)

Explanation

Countries gain from trade by specializing in what they produce at a lower opportunity cost (comparative advantage).