If the _____ differ(s)between two countries,this suggests the possibility for mutually advantageous trade.

Question

Quizplus · Accepted Answer

If two countries have different factor endowments, such as one country having an abundance of natural resources while the other has a skilled labor force, they may be able to specialize in producing the goods that they are relatively more efficient at producing and then trade with each other. This can lead to mutually advantageous trade as both countries benefit from being able to acquire the goods they need at a lower cost than if they were producing them domestically. Differences in currency, exchange rate, and government spending for defense may also impact trade, but they do not necessarily suggest the possibility for mutually advantageous trade.

If the _____ Differ(s)between Two Countries,this Suggests the Possibility for Mutually