Trade between two countries is based on comparative advantage.

Question

Quizplus · Accepted Answer

Trade between two countries is based on comparative advantage, which means that each country specializes in producing goods or services that they can produce more efficiently and at a lower opportunity cost than their trading partners, and then trade with each other to obtain other goods and services that they cannot produce as efficiently or at a higher opportunity cost. This allows both countries to gain from trade and increase their overall economic welfare.

Trade Between Two Countries Is Based on Comparative Advantage