4. What would some of the impacts on the U.S. economy if the world stopped trading goods and services?

What three factors will determine whether a nation has a higher or lower share of trade relative to its GDP?

1. How a single nation that is engaged in trade of a particular product may be worse off, while the world as a whole benefits from that trade?

International Trade-End of Chapter Problem Evaluate the following statement: is it true, false, or uncertain? "The United States can produce more tomatoes and avocados compared to Mexico, therefore there is no need for the United States to trade with Mexico for these goods." The statement is true. The United States has an absolute advantage in the production of both avocadoes and tomatoes. Due to this efficiency, it cannot benefit from trade with Mexico. The statement is false. Even though the United States has an absolute advantage in the production of both avocadoes and tomatoes, Mexico will still have a comparative advantage in one of these. Therefore, trade can be beneficial to both. O The statement is uncertain. There is not enough information on the opportunity cost of producing each good for both countries. Therefore we cannot pass a valid conclusion.