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WAEC Commerce 1992 Question 46

Question 46

Foreign Trade

In foreign trade, a country specializes in the production of a commodity in which it has

  1. A.high production potentials
  2. B.the greatest relative advantage
  3. C.a large market
  4. D.political influence
  5. E.the highest relative cost
Show the answer and explanation

Answer: B (the greatest relative advantage)

Explanation

By the law of comparative advantage, a country specialises where its relative (comparative) advantage is greatest.