Trade can be beneficial to an economy because:

Question

Quizplus · Accepted Answer

Trade allows countries to focus on producing the goods and services in which they have a comparative advantage, meaning they can produce them at a lower opportunity cost than other countries. This leads to increased efficiency and allows countries to obtain more goods and services than they could produce on their own, thereby benefiting the economy. Option A is partially correct, as trade may not result in more efficiency for all trading countries, but it does for those specializing in areas of comparative advantage. Option C is incorrect, as specialization in activities in which countries have a comparative advantage is actually beneficial for the economy. Option D is also incorrect, as trade may not directly prevent unemployment, although it can indirectly lead to job creation in certain industries.

Trade Can Be Beneficial to an Economy Because