Trade between countries
A)allows each country to consume at a point outside its production possibilities frontier.
B)limits a country's ability to produce goods and services on its own.
C)must benefit both countries equally; otherwise, trade is not mutually beneficial.
D)can best be understood by examining the countries' absolute advantages.

Question

Quizplus · Accepted Answer

Trade enables countries to specialize in the production of goods and services in which they have a comparative advantage, allowing them to consume beyond their production possibilities frontier. This does not necessarily mean trade limits a country's production capabilities (B), that benefits are always equal (C), or that absolute advantage is the best framework for understanding trade benefits (D), as comparative advantage is often more relevant.

Trade Between Countries