Economics (AS & A Level) · Oct / Nov 2021 · Paper 13 · Question 19
9708The reasons for international trade
According to the theory of comparative advantage, what makes trade beneficial between two countries?
- AEach country has different goods to sell and different tastes.
- BEach country has different opportunity costs of production.
- COne country has the absolute advantage in producing both goods.
- DThe prices of goods are different between each country.
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Correct answer: B. Each country has different opportunity costs of production.
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