A country will not trade unless
A)It has an absolute advantage.
B)The terms of trade are superior to domestic opportunities.
C)Its balance of trade is in a surplus position.
D)The production possibilities increase.

Question

Quizplus · Accepted Answer

Countries engage in trade only when they perceive the terms of trade to be more favorable than their domestic opportunities. If the benefits of trade are not perceived to outweigh the costs, then trade will not occur. Countries do not require an absolute advantage in production or a surplus in their balance of trade to engage in trade. The production possibilities increasing might lead to trade but is not a necessary condition for trade.

A Country Will Not Trade Unless