A country will only trade if:

Question

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A country will only trade if the terms of trade (i.e. the price at which it can sell its exports relative to the price at which it must pay for its imports) are superior to domestic opportunities, meaning it can make more money through trade than by producing goods domestically. Having an absolute advantage (A) or a surplus position in its balance of trade (C) can be advantageous for a country, but is not a requirement for trade. A low export ratio (D) is not necessarily an indicator of whether a country will trade or not.

A Country Will Only Trade If