Mutually beneficial trade will occur whenever the exchange rate between the goods involved is set at a level where:

Question

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When each country can import a good at a price below the opportunity cost of producing the good in the domestic market, it allows for specialization and efficiency in the production process, leading to increased economic welfare for both countries involved in the trade. This is known as comparative advantage, where each country specializes in producing what they are relatively more efficient at, and imports what they are relatively less efficient at.

Mutually Beneficial Trade Will Occur Whenever the Exchange Rate Between