Trade Is a Source of Economic Growth and Prosperity Because

question 113

Multiple Choice

Trade is a source of economic growth and prosperity because it

• A)moves goods,services,and resources from people who value them less to people who value them more.
• B)helps trading partners achieve larger outputs through division of labor,specialization,and adoption of methods of mass production.
• C)serves as a zero-sum game in which the gains to one trading partner are offset by losses to the other trading partner.
• D)both a and b,but not c.

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Definitions:

Endowment

The total resources available to an individual or entity, including assets, income, and wealth.

Competitive Equilibrium

Competitive equilibrium is a market condition where supply equals demand, with no incentive for price or quantity adjustments.

Pure Exchange

An economic model that assumes no production and focuses solely on the redistribution of existing goods and services among individuals based on preferences and initial endowments.

Partial Equilibrium Analysis

An economic analysis that considers the equilibrium in a single market or industry without taking into account the effects from other markets or industries.