Question

What is the trade reason when a country has to purchase products from another country because it cannot or will not produce the product on its own? Option 1: Specialization Option 2: political/historical Option 3: Increased Competition Option 4: surplus

Answer 1

Answer: The five main reasons international trade takes place are differences in technology, differences in resource endowments, differences in demand, the presence of economies of scale, and the presence of government policies.

Each model of trade generally includes just one motivation for trade.

Explanation: The purchase of goods from a foreign country is called import.

Trade increases competition and lowers world prices, which provides benefits to consumers by raising the purchasing power of their own income, and leads a rise in consumer surplus. Trade also breaks down domestic monopolies, which face competition from more efficient foreign firms.J