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Why do economies Trade?

economies Trade
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Why do economies Trade?

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Countries have different natural, human, and capital resources and different ways of combining these resources. They are not equally good at producing the goods and services that their residents demand. The decision to produce any good or service has an opportunity cost. Given a choice of producing one good over another, it is more efficient to produce the good with the lower opportunity cost, using the increased production of that good to trade for the good with the higher opportunity cost. World trade results in the more efficient use of the world’s scarce resources, and in higher standards of living, also increasing the range of available goods for consumption.

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