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JAMB Economics 2005 Question 42

Question 42

International Trade

Use the table below to answer the question.
Country | Groundnuts(unit) | Cocoa (units)
Nigeria | 8,000 | 1,000
Ghana | 1,000 | 8,000
Total production | 9,000 | 9,000
Applying the law of comparative costs, how many units of groundnuts will Nigeria produce?

  1. A.7, 000 units
  2. B.16,000 units
  3. C.9,000 units
  4. D.8,000 units
Show the answer and explanation

Answer: B (16,000 units)

Explanation

Nigeria is far better at groundnuts, so it moves all its resources into them. Resources that gave 8,000 groundnuts plus 1,000 cocoa now give 2 × 8,000 = 16,000 groundnuts.