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JAMB Economics 2003 Question 29

Question 29

International Trade

The theory of comparative advantage states that a commodity should be produced in that nation where the

  1. A.absolute money cost is least
  2. B.opportunity cost is least
  3. C.production possibility curve increases
  4. D.absolute cost is least
Show the answer and explanation

Answer: B (opportunity cost is least)

Explanation

Comparative advantage means producing what you can make at a lower opportunity cost than others.