Why does trade make all parties better off?

Question

Quizplus · Accepted Answer

Trade allows parties to acquire goods and services that are better suited to their tastes and preferences, which improves their overall satisfaction and well-being. By specializing in what they are good at producing or providing, countries can trade with each other and access a wider range of goods and services than they could produce themselves. This leads to gains from trade and benefits all parties involved. Option A is incorrect because consumption is not always preferable to saving, and both can have benefits depending on the circumstances. Option B is incorrect because trade can lead to a reduction in the domestic production of some goods and services, but overall, the benefits outweigh the costs. Option C is incorrect because trade does not guarantee everyone gets a job, although it can create employment opportunities and improve economic growth.

Why Does Trade Make All Parties Better Off