Question

Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves and baseball bats, but tom is better at producing both goods. In this case, trade could.

Answer 1

In this case, trade could benefit both Steve and Tom.

What is trade?

Trade, which is typically done in exchange for money, is the transfer of goods and services from one person or institution to another. Economists refer to a system or network that allows trading as a market.

While Tom makes baseball bats and gloves. Baseball bats and gloves are another product that Steve makes, but Tom excels at both. Here, a trade might be advantageous to both Tom and Steve. The fundamental reasoning behind this response is that even though Steve is not better at making baseball gloves and bats than Tom, he can still compete with him because Tom's higher-quality goods will encourage Steve to produce something slightly more superior in order to keep him in the market and in the competition. However, when Steve isn't creating as many high-quality goods, Tom will get a competitive advantage, which will undoubtedly assist him to increase his revenues and win over more devoted clients. As a result, in this cycle, both Steve and Tom will benefit.

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