Zalzhar, an African country, prefers conducting most of its trade with Rumbasa, another African country. This trade relation has evolved because of the fact that both the countries have consumers that come from the same kind of economic background and thus have similar purchasing power and preferences in goods. Given the information, it can be said that this scenario reflects the _____.

Question

Quizplus · Accepted Answer

The scenario reflects the theory of overlapping demand, which suggests that countries with similar economic backgrounds and consumer preferences are more likely to engage in trade with each other because they demand similar goods.

Zalzhar, an African Country, Prefers Conducting Most of Its Trade