2 Points When two countries trade with one another, it is most likely because A the wealthy people in each of the two countries are able to benefit, through trade, by taking advantage of other people who are poor. B the two countries wish to take advantage of the principle of comparative advantage. C the opportunity costs of producing various goods are identical for the two countries. D some people involved in the trade do not understand that one of the two countries will become worse-off because of the trade.
Added by Eric C.
Close
Step 1
This means that one country can produce a certain good more efficiently than another country. Show more…
Show all steps
Your feedback will help us improve your experience
Juan Nicolás and 95 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
(Related to Solved Problem 7.3) A political commentator makes the following statement: The idea that international trade should be based on the comparative advantage of each country is fine for rich countries like the United States and Japan. Rich countries have educated workers and large quantities of machinery and equipment. These advantages allow them to produce every product more efficiently than poor countries can. Poor countries like Kenya and Bolivia have nothing to gain from international trade based on comparative advantage.
Juan N.
(Related to Solved Problem 7.3 on page 222 ) A political commentator makes the following statement: The idea that international trade should be based on the comparative advantage of each country is fine for rich countries like the United States and Japan. Rich countries have educated workers and large quantities of machinery and equipment. These advantages allow them to produce every product more efficiently than poor countries can. Poor countries like Kenya and Bolivia have nothing to gain from international trade based on comparative advantage.
Comparative Advantage and the Gains from International Trade
How Countries Gain from International Trade
The main advantage of trade between two countries is that: ​ A) trade makes both countries more self-sufficient. B) employment in both countries will increase. C) both countries can produce beyond their previous resource and productivity constraints. D) both countries can consume beyond their previous resource and productivity constraints.
Benjamin D.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD