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WAEC Economics 2020 Question 46

Question 46

International Trade

The principle of comparative advantage encourages a country to

  1. A.produce only consumer goods.
  2. B.engage in trade if it can produce a commodity at a lower cost.
  3. C.specialize in the production of all goods.
  4. D.try as much as possible to be self-sufficient.
Show the answer and explanation

Answer: B (engage in trade if it can produce a commodity at a lower cost.)

Explanation

A country gains by producing and trading what it can make at a lower opportunity cost.