GCECommerceInternational Trade2024

A major reason why countries engage in international trade is that

Aall countries have equal factor endowments and seek to exchange surpluses
Bno single country can produce all the goods and services it needs efficientlyCORRECT
Cinternational trade eliminates the need for foreign exchange transactions
Dgovernments generate more revenue from domestic trade than from foreign trade
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Why the answer is B, and why the others tempt you.
Countries engage in international trade primarily because no single country possesses all the natural resources, technology, and factor endowments needed to produce every good and service efficiently. This uneven distribution of resources and differences in production capabilities make trade mutually beneficial. Option A is incorrect because countries do not have equal factor endowments; it is precisely the inequality that drives trade. Options C and D are factually incorrect statements about international trade.
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