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WAEC Economics 2002 Question 43

Question 43

International Trade

International trade is based on the law of

  1. A.absolute cost advantage.
  2. B.variable proportion
  3. C.comparative cost advantage.
  4. D.mutual co-operation.
Show the answer and explanation

Answer: C (comparative cost advantage.)

Explanation

Countries gain by specialising in goods in which they have the lowest opportunity cost: comparative advantage.