Differences in opportunity cost and comparative advantage allow for gains from trade.

Question

Quizplus · Accepted Answer

Differences in opportunity cost and comparative advantage mean that different parties have different strengths and weaknesses in producing certain goods or services. By specializing in producing the goods or services they are most efficient in and trading with others who are more efficient in producing different goods or services, there is a potential for both parties to benefit and generate gains from trade.

Differences in Opportunity Cost and Comparative Advantage Allow for Gains