ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It is mutually beneficial
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It is legally required
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It avoids specialization
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It involves low cost for both nations
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Detailed explanation-1: -Which of the following statements best describes trade between two nations? Answers: A. It is mutually beneficial.
Detailed explanation-2: -Trade between two agents or countries allows the countries to enjoy a higher total output and level of consumption than what would have been possible domestically. Canada and Mexico can each specialize in the good they have a comparative advantage in and exchange with one another.
Detailed explanation-3: -The terms of trade are mutually beneficial as long as they are between the two countries’ opportunity costs. For example, any amount of medicine greater than 1/3 and less than 1 traded for 1 cotton shirt would represent mutually beneficial terms of trade.
Detailed explanation-4: -Which of the following statements best describes the benefits of international trade? Countries gain from exchange and specialization.
Detailed explanation-5: -Comparative advantage is a principle of economics which states that trade between two countries will be mutually beneficial as long as their domestic opportunity costs of production differ.