Question

An economic theory in international trade that is based on the assumption that there are only two countries trading two goods

A. is useless, since the real world has many countries trading many goods.
B. can be useful only in situations involving two countries and two goods
C. can be useful in the classroom but is useless in the real world
D. can be useful in helping economists understand the complex world of international trade involving many countries and many goods

Answer 1

The correct answer is option D.

Step-by-step explanation:

An economic theory regarding international trade is based on two countries model. Though this is not applicable to real-world situations, as it involves only two countries and two goods. But it is helpful in understanding the complex real-world situations of international trade involving many countries and many goods.

If we use real-world situations to understand world trade it will be too complex to understand.