GCEEconomicsInternational Trade2024

Which of the following best explains the principle of comparative advantage in international trade?

AA country should produce only goods in which it has an absolute advantage
BA country should specialise in producing goods in which its opportunity cost is relatively lowerCORRECT
CA country should import all goods that other countries can produce more cheaply
DA country should trade only with nations that have similar factor endowments
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Why the answer is B, and why the others tempt you.
The principle of comparative advantage, developed by David Ricardo, states that a country should specialise in producing and exporting goods for which its opportunity cost is relatively lower compared to its trading partners. This allows mutually beneficial trade even when one country has an absolute advantage in all goods. Options A and C are misconceptions of the principle, while D is unrelated to comparative advantage.
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