Which of the Following Best Characterizes the Relationshipbetween the Parties

question 33

Multiple Choice

Which of the following best characterizes the relationshipbetween the parties to a trade and the gains from trade?

• A)Gains from trade are fueled by differences in preferences and differences in opportunity costs of production.(True Answer
• )Correct
• B)Gains from trade are fueled by differences in preferences only.
• C)Gains from trade are fueled by differences in opportunity costs of production only.
• D)Gains from trade are greatest when there are no differences between the two parties to trade.

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Definitions:

Overall

Encompassing everything or in general; a term not specific to economics but often used to imply a holistic or comprehensive perspective.

Substantially

To a great or significant extent, often used to signify the importance, size, or degree of something.

Positive Trade Balance

A situation where the value of a country's exports exceeds the value of its imports, also known as a trade surplus.

Merchandise

Goods produced for the purpose of being sold, typically referred to in the context of retail sales and trade.