Which statement describes reasons why countries engage in trade?

Which statement describes reasons why countries engage in trade?

• A. Import goods and services they need; Export goods and services they can profit from
• B. Import goods only and never export
• C. Raise tariffs to protect domestic industries
• D. Trade is optional and rarely beneficial

Answer: (C)

Countries trade to get goods and services they can’t produce efficiently at home while selling what they can produce more cheaply or well. By specializing in activities where they have a comparative advantage and exchanging with others, nations get a wider variety of goods at lower costs than if they tried to produce everything themselves. This is why the statement that best describes why countries engage in trade is that they import what they need and export what they can profit from producing. Policies like raising tariffs are tools that governments use to shape trade, but they don’t explain why trade happens. Tariffs can actually reduce the amount of trade by making imports more expensive. And the idea that trade is optional and rarely beneficial isn’t accurate, since, in most cases, trade expands choices and lowers costs for consumers and businesses through specialization and efficiency.

Countries trade to get goods and services they can’t produce efficiently at home while selling what they can produce more cheaply or well. By specializing in activities where they have a comparative advantage and exchanging with others, nations get a wider variety of goods at lower costs than if they tried to produce everything themselves. This is why the statement that best describes why countries engage in trade is that they import what they need and export what they can profit from producing.

Policies like raising tariffs are tools that governments use to shape trade, but they don’t explain why trade happens. Tariffs can actually reduce the amount of trade by making imports more expensive. And the idea that trade is optional and rarely beneficial isn’t accurate, since, in most cases, trade expands choices and lowers costs for consumers and businesses through specialization and efficiency.