What is the source of gains from trade?

Question

Quizplus · Accepted Answer

The source of gains from trade is comparative advantage. This means that two countries can benefit from trade if each specializes in producing the goods and services that they have a comparative advantage in, and then trade with each other. Comparative advantage means that one country can produce a good at a lower opportunity cost than another country. This leads to both countries being able to consume more goods and services and ultimately increasing economic welfare. Tariffs and national self-sufficiency can limit gains from trade by limiting the amount of trade flow between countries and decreasing specialization opportunities, while absolute advantage is not as effective as comparative advantage in generating trade gains.

What Is the Source of Gains from Trade