Microeconomics (MindTap Course List)
Microeconomics (MindTap Course List)
10th Edition
ISBN: 9781285859484
Author: William Boyes, Michael Melvin
Publisher: Cengage Learning
Question
Book Icon
Chapter 20, Problem 1E
To determine

Benefits of two countries having mutual voluntary trade.

Expert Solution & Answer
Check Mark

Explanation of Solution

Trade between two countries is extremely beneficial to a nation. It is believed that any nation's wealth is based on national holdings. In general, trade is beneficial between two countries that have strong markets at two different levels and in different sectors.

The opening of trade would do more to make new exchanges profitable.It would also affect what people decide to produce with their labor. The changes in demand caused by international trade would lead each nation to follow in its absolute advantage in deciding what to make. Full analysis of international trade requires consideration of the entire economy.Trade also demonstrates the pattern of exporting one product and importing the other.

It positively increases the economic interdependence of two nations. Industries are dependent upon a variety of raw materials, which no country/nationcan produce alone,and the interdependence is in the interest of both the countries.

Limitations of voluntary trade are very complex. It is because every country has a different pattern and format of trading. The deals may be good or bad in accordance to the relations shared by both the trading partners.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Hand written solutions are strictly prohibited
Melitz explains that under free trade
Why are some economists who favor free trade concerned about the proliferation of regional trade agreements?
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning
Text book image
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Macroeconomics
Economics
ISBN:9781337617390
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Microeconomics
Economics
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Text book image
Microeconomics A Contemporary Intro
Economics
ISBN:9781285635101
Author:MCEACHERN
Publisher:Cengage