According to economic models of trade,when the United States and Mexico trade:

A) the United States will be worse off because wages in Mexico are so low.
B) Mexico will be worse off because the United States is a stronger economic power.
C) both Mexico and the United States will be better off.
D) both Mexico and the United States will be worse off.

Question

Chelsea Sheridan · Accepted Answer

Final Answer : C, Explanation :  Economic models of trade suggest that both countries can benefit from trade by specializing in goods and services that they have a comparative advantage in producing. Mexico may have lower wages, but they can still produce some goods more efficiently than the United States, allowing for greater efficiency and lower costs for U.S. businesses. In turn, U.S. businesses can provide needed goods and services to Mexico, boosting their economy as well. Overall, both countries can benefit and potentially increase their economic growth through trade.

Definitions

Learning Objectives

Learning Objectives

Related questions