Gains from trade are made up of the gains from ________ plus the gains from ________.
A) population size; diversification
B) exchange; diversification
C) technology; education
D) exchange; specialization

Question

Quizplus · Accepted Answer

Gains from trade refer to the benefits that two parties receive when they specialize in producing goods or services that they are most efficient at and trade with each other. The gains from trade are made up of the gains from exchange (getting goods and services that they could not have otherwise) and the gains from specialization (producing the goods or services that they are most efficient at and therefore using resources more efficiently). Therefore, option D is the correct choice as it refers to the gains from exchange and specialization.

Gains from Trade Are Made Up of the Gains from ________