A. absolute cost
B. comparative cost
C. fixed cost
D. variable cost
Correct Answer: Option B
B. comparative cost
Explanation
The principle of comparative cost states that; international trade takes place between two countries when the ratios of the comparative cost of producing goods differ, and each country would specialize 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.
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