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Problem 1 Problem 2 Problem 3 Problem 4 Problem 5 Problem 6 Problem 7 Problem 8 Problem 9 Problem 10 Problem 11 Problem 12 Problem 13 Problem 14 Problem 15 Problem 16 Problem 17 Problem 18 Problem 19 Problem 20 Problem 21 Problem 22 Problem 23 Problem 24 Problem 25 Problem 26 Problem 27 Problem 28 Problem 29 Problem 30 Problem 31 Problem 32 Problem 33 Problem 34

Problem 13 Medium Difficulty

How does comparative advantage lead to gains from trade?

Answer

So, at the end both the country will be having more goods than before when they were producing
everything domestically.

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Principles of Microeconomics for AP® Courses

Chapter 19

International Trade

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Video Transcript

this question asks how comparative advantage leads to gains from trade. What we know is that countries with comparative advantage essentially export their surplus surplus. Meeting extra products four goods to the countries that don't have them or cannot produce them as efficiently. For example, these could be smaller countries. Therefore, what we knows that comparative advantage affects production decisions and affects trade, trade effects, wages of the labor and prices of the product. In other words, there are gains in trade because trade increases the social surplus again. Surplus is an economic term list in the textbook, meaning the extra goods. And this leads to more variety because you're getting so many different products from so many different countries. A good examples how the U. S. Imports many products, whether it be agricultural foods or that fruits and vegetables.

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Steven A. Greenlaw, David Shapiro, Timothy Taylor

Principles of Microeconomics for AP® Courses

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Introduction

How Markets Work

Markets and Welfare

The Economics of the Public Sector

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