To say that countries gain from trade means that:

Question

Quizplus · Accepted Answer

When countries engage in trade, they can specialize in producing goods that they are relatively more efficient in producing, and import goods that they are relatively less efficient in producing. This enables them to consume beyond their production possibilities frontiers and gain from trade. Therefore, option C is correct. Option A is incorrect because trade is not a zero-sum game - both countries can gain from trade. Option B is incorrect because even if one country has an absolute advantage in producing all goods, it can still gain by specializing in the goods it produces most efficiently and trading for other goods. Option D is incorrect because the potential gains from trade are based on a country's comparative advantage, not its size.

To Say That Countries Gain from Trade Means That