MICRO ECON 5-TEXT
5th Edition
ISBN: 9781305631922
Author: MCEACHERN
Publisher: CENGAGE L
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Chapter 19, Problem 1.1P
To determine
To Explain:
Despite the absence of
Concept Introduction:
Expert Solution & Answer
Explanation of Solution
Comparative advantage is not the only basis of trade. There could be other reasons for which trade can take place between two countries. These include decreasing costs or increasing returns, difference in tastes or demand, economies of scale and technological changes. Therefore, even when two countries do not have comparative advantage based on any of the stated reasons, opportunities for trade can arise and they may experience gain from trade.
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