GK
WORLD GEOGRAPHY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which statement best explains why nations must trade?
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all nations belong to free trade agreements
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all nations seek out new production methods
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no nation has all necessary resources
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no nation can employ all of its laborers
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Explanation:
Detailed explanation-1: -According to Ricardo, nations can benefit from trading even if one of them has an absolute advantage in producing everything. 3 In other words, countries must choose to diversify the goods and services they produce which requires them to consider opportunity costs.
Detailed explanation-2: -For example, countries with plentiful oil resources can generally produce oil inexpensively. Because Saudi Arabia produces oil very cheaply, it holds a comparative advantage in oil, and it exports oil in order to finance its purchases of imports.
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