Explain it to a child ?

Why do countries trade? What does opportunity cost have to do with trade?


Explain it in a way a child would could understand it please.**

6 Answers

  • Oiy
    Lv 6
    4 months ago

    The countries trade to increase the goods and services to consume. If the trade is free and based on the comparative advantage calculated by the lowest opportunity cost, it will be a win-win situation which means the trade partners will have the increased welfare and living standard.

  • fcas80
    Lv 7
    4 months ago

    No differently than between two people.  I need to buy food.  In theory I could grow my own, but if you specialize in this, I am better off spending my time in some other occupation and paying you for your efforts.  

  • Zirp
    Lv 7
    4 months ago

    Most countries like to have things that they don't have themselves. Here in the netherlands we export a lot of dairy because cows like our climate, and we import things that don't grow here, like oranges and bananas

  • Anonymous
    4 months ago

    Same reason people in the same country trade.

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  • 4 months ago

    The USA and you dad has a car. It needs gas to go.

    Arabs have oil, we'll buy it from them - so we can go to Vegas.

    Trade - I have candy and you don't.

  • Danny
    Lv 5
    4 months ago

    Countries trade because hotter countries grow foods that colder countries can't go, not all products a country sells are made in that country, will cost too much.

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