BUS 313 CHP2
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An important insight of international trade theory is that when countries exchange goods and services one with the other, it
Benefits both countries, usually not equally beneficial to both countries.
The potential for gains from the rearrangement of production among countries is due to
differing opportunity costs
The Ricardian trade model put forth by British economist David Ricardo nearly two centuries ago is one that
expounds principles still valid in today's world.
Economists use the term opportunity cost to refer to
the value of the next best alternative occurring as a result of making a particular choice.