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JAMB Economics 2001 Question 49

Question 49

International Trade

The major reason why nations engage in international trade is that

  1. A.it allows free movement of factors of production
  2. B.it makes possible the use of capital-intensive method of production
  3. C.nations are substantially different in their endowments of economic resources
  4. D.it affords the trading nations the opportunity to earn high profit
Show the answer and explanation

Answer: C (nations are substantially different in their endowments of economic resources)

Explanation

Countries have different resources, so each can specialise in what it produces best and trade for the rest.