Many economists support trade agreements, maintaining that the agreements improve economic efficiency because they result in goods being produced
A)at the highest profit margin.
B)with maximum deadweight loss.
C)with zero producer surplus.
D)at the lowest opportunity cost.

Question

Quizplus · Accepted Answer

Trade agreements allow countries to specialize in the production of goods in which they have a comparative advantage, meaning they can produce those goods at a lower opportunity cost than other countries. By specializing and trading, countries are able to produce more goods overall, resulting in an increase in economic efficiency. Therefore, the correct choice is D - at the lowest opportunity cost.

Many Economists Support Trade Agreements, Maintaining That the Agreements Improve