"Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods." Explain. (includes detailed example)
Title: "Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods." Explain. (includes detailed example)
Category: /Business & Economy
Details: Words: 628 | Pages: 2 (approximately 235 words/page)
"Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods." Explain. (includes detailed example)
Category: /Business & Economy
Details: Words: 628 | Pages: 2 (approximately 235 words/page)
In the world market, countries trade products they wouldn't be able to produce on their own. Countries like Cuba specializes in cigar production, Japan in electronics, and Russia in rocket technology. However, even if a country has an absolute advantage in producing all goods, they still will benefit from trade. Many economic factors are involved with trade. Among the major factors are opportunity costs, comparative advantage, specialization and finally trade.
Opportunity cost is defined as …showed first 75 words of 628 total…
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…showed last 75 words of 628 total…amp;lt;Tab/>4<Tab/>1<Tab/>8
Gains from Trade:
Increase in Consumption<Tab/>None<Tab/>+1 ton<Tab/>None<Tab/>+2 tons
In conclusion, all the economic factors mentioned combined with trade allows benefits even to a country that has the ability to produce goods while using fewer resources than other countries.