For a trade to have mutual benefits, terms of trade must be between each trader's local opportunity costs.

Name: For a trade to have mutual benefits, terms of trade must be between each trader's local opportunity costs.
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According to the theory of comparative advantage, for both countries to benefit from trade, they must specialize in producing goods in which they have a lower opportunity cost and then trade with each other. Thus, the terms of trade must reflect each country's local opportunity cost.

For a Trade to Have Mutual Benefits, Terms of Trade