Question

The Republic of South Africa exports edible fruits and nuts into the common market known as the European Union, and imports from the European Union other products which South Africa could produce but at a higher cost than what it costs the Europeans to produce. This practice follows the premise of _________________.

Answer 1

Answer: The theory of comparative advantage

Step-by-step explanation:

When a country is able to produce certain goods or service at a lower cost (known as an opportunity cost) compared to another country this is known as comparative advantage.

This lower cost or opportunity cost is what will be used to determine a trade between countries.

The country may not be doing well at producing that product but the fact that they are able to produce those products at a lower cost they will always benefits greatly from the trade off.