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3. Identify and describe the three most common reasons countries trade, and give an example of each of these trade motivations in action. (4 points)

A. Comparative Advantage: When a country can produce a good or service at a lower opportunity cost than another country.
Example: Country A has a comparative advantage in producing wine, while Country B has a comparative advantage in producing cheese. Therefore, Country A exports wine to Country B and imports cheese from Country B.

B. Access to Resources: When a country lacks certain resources that are abundant in another country.
Example: Japan imports oil from Saudi Arabia because Japan has limited natural oil reserves.

C. Economic Growth and Development: Trading can stimulate economic growth and development by providing markets for surplus goods and services.
Example: China exports manufactured goods to the United States, which helps drive China's economic growth.

Sagot :

GinnyAnsweridn

Final answer:

Countries trade based on differences in technology, resource endowments, and demand, leading to advantageous exchanges.


Explanation:

Three Common Reasons for Countries to Trade:

  1. Differences in Technology: Trade occurs when countries vary in their technological abilities, leading to advantageous trade based on the Ricardian model. For example, Japan's advanced technology in electronics allows it to export high-quality goods.
  2. Differences in Resource Endowments: Countries trade when their resource endowments differ, as seen in the Heckscher-Ohlin model. An example is Saudi Arabia exporting oil due to its rich natural resource endowment.
  3. Differences in Demand: Trade happens when countries have varying demands or preferences. For instance, Italy's demand for coffee differs from Sweden's preference for dairy products, leading to trade based on consumer preferences.

Learn more about Reasons for countries to trade here:

https://brainly.com/question/11176651


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