The US can produce more of almost everything (US has an absolute advantage in the production...
The US can produce more of almost everything (US has an absolute advantage in the production of most commodities). Yet we only produce some and trade with other countries. Why don't we produce everything? What do we gain from trade?
Homework Answers
answer: U.S. has absolute advantage in production of many goods but there are other goods also in which other countries or states have absolute advantage and the production cost of these goods is high in U.S. so U.S. import those goods from foreign at lower prices than domestic prices which is very beneficial for the social welfare that is why U.S. does not produce everything. many goods and services U.S. import from foreign which reduces their cost of production and country gain from trade as they import high cost producing goods and export goods in which it has absolute advantage.
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The US can produce more of almost everything (US has an absolute
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