JAMB Economics 2011 Objective — Question 43

Question 43 of 49 from the Joint Admissions and Matriculation Board (JAMB) Economics 2011 Objective paper, with the correct answer and a full explanation.

Trade takes place because of

A. A. inefficiency in production
B. B. opportunity cost
C. C. comparative advantageCorrect
D. D. marginal utility

Explanation

Comparative advantage determines whether trade should take place or not. When the opportunity cost of production of a commodity is high relative to another country, that commodity should be produced by the country with lower opportunity cost.

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