Another microeconomics question?

Question

is trade an efficient activity?

Answer 1

Yes.

Answer 2

Yes.... it's to do with comparative advantages. Each country/place will find it cheaper/easy to perform a particular task or produce something. If a country tries to produce something that they are not good at, that is a poor allocation of resources. It would be cheaper for them to import that good, and use their resources to do something else....

Hope that makes sense..... if not just google 'comparative advantage' & opportunity costs , that's what it's all about.