A country trades with other countries because
A)it can gain in production and consumption.
B)it wants to improve foreign relations.
C)its government can earn taxes on imported goods.
D)it has an excess production capacity.
E)its residents always prefer imported goods to domestic goods.

Question

Quizplus · Accepted Answer

Countries trade to gain benefits in production and consumption. By trading with other countries, a country can specialize in producing goods or services where it has a comparative advantage (lower opportunity cost) and import goods or services where it has a comparative disadvantage (higher opportunity cost). This can lead to increased efficiencies, lower costs, and a wider range of consumer goods for the country.

A Country Trades with Other Countries Because