Question

One of the PRIMARY reasons that trade between nations takes place is because A) no nation can be economically self-sufficient. B) resources are evenly distributed around the world. Eliminate C) nations use their absolute advantage in production to monopolize international markets. D) nations produce a surplus at a lower cost and export it for goods that are too costly to pro

Answer 1

The fourth alternative is correct (D).

Nations produce goods and services according to their productive capacity, their natural resources and the specialization of the workforce. In this way, some goods and services are expensive for a nation to produce, but are cheaper for other nations to produce.

Thus, if each nation specializes in the product in which it has a production advantage, nations can make tradeoffs. The country that has an advantage in the production of a good can export it to other countries and still can import the goods to which it is not specialized.