Nations engage in international trade because of difference in?
- absolute cost
-
comparative cost
- fixed cost
- variable cost
The correct answer is: B
Explanation
The principle of comparative cost states that;
international trade takes place between two countries when the ratios of comparative cost of producing goods differ, and each country would specialise in producing that commodity in which it has a comparative advantage.
Comparative cost advantage is when a country produces a good or service for a lower opportunity cost than other countries.