ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Because they like to buy goods only made in the European Union by French workers
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Because they like to make a variety of items fairly well and not put all of their efforts in to what they do best
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Because countries cannot produce all of the goods/services they need so they focus on what they do best
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Because they do not want to trade with other nations around the world.
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Detailed explanation-1: -Whenever countries have different opportunity costs in production they can benefit from specialization and trade. Benefits of specialization include greater economic efficiency, consumer benefits, and opportunities for growth for competitive sectors.
Detailed explanation-2: -Why don’t countries specialize in the production of just a few goods for which they have a comparative advantage? In most cases, increasing opportunity costs would accompany the continually increasing production of a product specialist.
Detailed explanation-3: -Trade contributes to global efficiency. When a country opens up to trade, capital and labor shift toward industries in which they are used more efficiently. Societies derive a higher level of economic welfare.
Detailed explanation-4: -Countries trade with each other when, on their own, they do not have the resources, or capacity to satisfy their own needs and wants. By developing and exploiting their domestic scarce resources, countries can produce a surplus, and trade this for the resources they need.