When the terms of trade are between the opportunity costs for two countries,then both countries benefit if they:

Question

Quizplus · Accepted Answer

If the terms of trade are between the opportunity costs for two countries, specializing in production and engaging in international trade will allow both countries to benefit. By specializing in the production of goods or services that each country has a comparative advantage in, they can increase their own production and consumption possibilities. When they trade with each other, they can exchange goods at a price that is mutually beneficial (determined by the terms of trade), allowing both countries to gain from the trade. Therefore, choice D is the best option.

When the Terms of Trade Are Between the Opportunity Costs