Asked by Taylor Wenzel on Jun 24, 2024
Verified
Differences in opportunity cost allow for gains from trade.
Opportunity Cost
The value of the best alternative forgone when a choice is made, representing the benefits one could have received by taking an alternative action.
Gains From Trade
The benefit that entities receive from engaging in voluntary trade, often resulting in better allocation of resources and increased efficiency.
- Assess the effects of trade and specialization on the potential for production and consumption in an economy.
- Recognize the importance of specialization and comparative advantage in encouraging interdependence between individuals and nations.
Verified Answer
LB
Latoya Blackwood-WillisJun 29, 2024
Final Answer :
True
Explanation :
Opportunity cost refers to the benefit a person or country gives up by choosing one alternative over another. Differences in opportunity cost between individuals or countries mean that they can specialize in producing goods for which they have a lower opportunity cost and trade for goods for which they have a higher opportunity cost, leading to gains from trade for all parties involved.
Learning Objectives
- Assess the effects of trade and specialization on the potential for production and consumption in an economy.
- Recognize the importance of specialization and comparative advantage in encouraging interdependence between individuals and nations.
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