Under what condition can two nations benefit from engaging in international trade?

Multiple choice question for Basic of Economics. Select an option, then review the explanation below.

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When their production cost ratios differWhen their tariff levels varyWhen their price ratios are not the sameBoth differing cost ratios and price ratiosNone of the above

Explanation

Two countries can gain from trade if they have differences in production costs and price ratios. Variations in tariff rates alone do not guarantee mutual benefits. Therefore, both cost and price ratio differences are essential factors enabling gains from foreign trade.

Practice related questions from the same subject.

1.Which of the following best describes deflation?
2.Which of the following represents a legitimate form of currency?
3.Which political ideology is best summarized by the phrase, "From each according to his ability, to each according to his needs"?
4.Which type of currency experiences a decline in its exchange rate due to a continuous balance of payments deficit?
5.What is the standard abbreviation used to denote barrels when measuring oil?

Under what condition can two nations benefit from engaging in international trade?

Explanation

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