If the _______ differ between two countries, this suggests the possibility for mutually advantageous trade.

Question

Quizplus · Accepted Answer

Opportunity costs are the costs of choosing one alternative over another. If the opportunity costs differ between two countries, then it suggests that one country has a comparative advantage in producing a certain good or service while the other country has a comparative advantage in producing something else. This creates the potential for mutually advantageous trade as each country can specialize in producing what they are comparatively better at and then trade with one another. Marginal costs, absolute costs, and fixed costs are not directly related to comparative advantage and trade between countries.

If the _______ Differ Between Two Countries, This Suggests the Possibility