One of the PRIMARY reasons that trade between nations takes place is because
A) no nation can be economically self-sufficient.
B) resources are evenly distributed around the world.
C) nations use their absolute advantage in production to monopolize international markets.
D) nations produce a surplus at a lower cost and export it for goods that are too costly to produce.*****
I agree with you. It is very expensive to grow coffee beans in Iceland and at least as difficult to fish for cod in Brazil.
thx
nations produce a surplus at a lower cost and export it for goods that are too costly to produce
boi sit down
The correct answer is D) nations produce a surplus at a lower cost and export it for goods that are too costly to produce.
Trade between nations occurs primarily because nations are able to produce certain goods at a lower cost and in surplus quantities compared to other nations. This is known as comparative advantage. Comparative advantage means that a nation can produce a specific good at a lower opportunity cost compared to other goods or compared to another nation.
When a nation has a comparative advantage in producing a good, it's more efficient for that nation to specialize in producing that good and trade with other nations for goods that are more costly for them to produce. This allows nations to benefit from the trade by exchanging their surplus goods for goods they need but are more expensive to produce domestically. By engaging in trade, nations can maximize their economic welfare and benefit from the specialization of production.
To determine if a nation has a comparative advantage in producing a good, economists analyze the opportunity cost of producing that good. Opportunity cost is the value of the next best alternative that must be given up in order to produce a particular good. By comparing opportunity costs, economists can determine which goods a nation has a comparative advantage in producing and, therefore, identify potential opportunities for trade.