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)some people involved in the trade do not understand that one of the two countries will become worse-off because of the trade.
C)the opportunity costs of producing various goods are identical for the two countries.
D)the two countries wish to take advantage of the principle of comparative advantage.

Question

Quizplus · Accepted Answer

The principle of comparative advantage states that two countries should specialize in producing the goods they can produce at a lower opportunity cost, and trade with each other to obtain the other goods they need. Therefore, countries may engage in trade to take advantage of their comparative advantages, which allows both countries to benefit from trade. A is incorrect because it implies that trade only benefits the wealthy and exploits the poor. B is incorrect because it suggests that some people involved in trade do not understand the potential outcomes, which is unlikely given the complexity of trade relationships. C is incorrect because the opportunity costs of producing goods are rarely identical between countries.

When Two Countries Trade with One Another,it Is Most Likely