JAMB - Commerce (2025 - No. 24)
Which of the following describes the reason for international trade?
Balance of payment
Absolute cost advantage
Balance of trade
Comparative cost advantage
Explanation
International trade is primarily driven by the concept of comparative cost advantage. This economic theory suggests that
countries should specialize in producing goods for which they have a lower opportunity cost and trade for goods that other
countries produce at a lower opportunity cost. This allows for efficient use of resources and increases the total output and
consumption.
countries should specialize in producing goods for which they have a lower opportunity cost and trade for goods that other
countries produce at a lower opportunity cost. This allows for efficient use of resources and increases the total output and
consumption.
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