Give geographical reason: Geographical diversity is responsible for trade to occur.

Answer: Differences between regions create surplus in one place and demand in another.

• Because of differences in climate, soil, relief and natural resources, regions produce different goods: for example, tea in Assam, coffee in Brazil, petroleum in West Asia.
• No region can produce everything it needs; it has a surplus of some goods and a shortage of others.
• Differences in labour, skills, technology and capital also lead to specialisation.
• Exchange of surplus goods to meet shortages gives rise to trade between regions and countries.