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.
Do you want to study Agricultural Extension in OOU? Before you apply for the OOU…
Do you want to study Agricultural Economics in OOU? Before you apply for the OOU…
Do you want to study Cooperative and Business Management in OOU? Before you apply for…
Do you want to study Home and Hotel Management in OOU? Before you apply for…
Do you want to study Animal Production in OOU? Before you apply for the OOU…
Do you want to study Crop Production in OOU? Before you apply for the OOU…