Which statement best completes the diagram above?
The answer is (Option B) “Two countries have a surplus of different goods.”
In an attempt to make business more accessible, trade has become increasingly international. There are numerous factors that cause disparities in technology, aid endowments, differences in demand, the presence of economies of scale, and the existence of president rules.
For example, if a country A has a surplus of a good ‘a’ and a country B has a surplus of a particular good ‘b,’ then the country that has a surplus of a good can trade this good for the one that has a surplus of a good.
This is the foundation of trade.