Asked by Priyadarshi Samal on Jul 04, 2024
Verified
International trade is most likely to occur whenever:
A) nations have an absolute advantage in the production of goods.
B) all of the trading nations are self-sufficient.
C) world production equals world consumption.
D) each of the trading nations gains from trade.
E) labor is cheaper abroad.
Absolute Advantage
The ability of an individual, company, or country to produce a good or service more efficiently than its competitors with the same amount of resources.
World Production
encompasses the total output of goods and services by all economies across the globe over a specific period.
Self-Sufficient
The ability to fulfill all of one's needs without relying on external assistance.
- Acquire knowledge on how comparative advantage underpins the relationship between specialization and international trade.
- Identify factors that determine the pattern of international trade.
Verified Answer
MN
Monica NuñezJul 10, 2024
Final Answer :
D
Explanation :
International trade is most likely to occur when trading nations gain from trade. This happens when each country specializes in producing goods they have a comparative advantage in and then trading those goods with other countries. This leads to increased efficiency and a larger overall output, benefiting all countries involved. Absolute advantage (A) and self-sufficiency (B) are not necessary conditions for international trade, and world production equals consumption (C) is not always achievable due to differences in demand and supply between countries. While cheaper labor abroad (E) can be a factor, it is not the only reason for international trade and may not always be enough to drive trade.
Learning Objectives
- Acquire knowledge on how comparative advantage underpins the relationship between specialization and international trade.
- Identify factors that determine the pattern of international trade.