Question

In order for mutually beneficial trade to occur between two otherwise isolated nations, Multiple Choice each nation must face constant costs in the production of the good it exports. each nation must be able to produce at least one good absolutely cheaper than the other. one nation's production must be labor-intensive, while the other nation's production is capital-intensive. each nation must be able to produce at least one good relatively cheaper than the other.

Answer 1

In order for mutually beneficial trade to occur between two otherwise isolated nations, each nation must be able to produce at least one good relatively cheaper than the other.

What does comparative advantage mean?

A country has comparative advantage in production if it produces at a lower opportunity cost when compared to other countries. A country should specialise in the production of goods for which it has a comparative advantage. This is when trade can be mutually beneficial .

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