When is international trade between two nations beneficial in terms of the cost ratios of products?

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

Show Answers

When the cost ratios are identicalWhen the cost ratios differWhen the cost ratios are unknownWhen the cost ratios are decliningNone of the above

Explanation

Trade becomes advantageous when the relative costs of producing goods vary between countries. This difference allows each country to specialize in producing goods at a lower opportunity cost, making option B correct.

Practice related questions from the same subject.

1.Which of the following best describes deflation?
2.Under what condition can two nations benefit from engaging in international trade?
3.Which of the following represents a legitimate form of currency?
4.Which political ideology is best summarized by the phrase, "From each according to his ability, to each according to his needs"?
5.Which type of currency experiences a decline in its exchange rate due to a continuous balance of payments deficit?

When is international trade between two nations beneficial in terms of the cost ratios of products?

Explanation

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