Patterns of trade among nations are primarily determined by
A)cultural considerations.
B)political considerations.
C)comparative advantage.
D)differences in the income elasticity of demand among nations.

Question

Quizplus · Accepted Answer

Patterns of trade among nations are primarily determined by comparative advantage. A country has a comparative advantage in producing a good if it can produce it at a lower opportunity cost than another country. Trade allows countries to specialize in the production of goods in which they have a comparative advantage and trade with other countries for goods in which they do not have a comparative advantage.

A and B are incorrect because while cultural and political considerations may play a role in trade, they are not the primary determinants.

D is incorrect because differences in income elasticity of demand among nations may affect the volume of trade, but do not determine the patterns of trade.

Patterns of Trade Among Nations Are Primarily Determined by