If Portugal sends out 30 units of wine, it will get back 45 units of cloth.
Why do countries trade?
Trade promotes competition, lowers global prices, and raises the purchasing power of individual consumers' incomes, all of which benefit consumers and build consumer surplus. Domestic monopolies are also destroyed by trade as they are challenged by more productive foreign businesses.
Why do the countries need to exchange resources?
When nations lack the resources or capacity to meet their own needs and wants, they trade with one another. Countries can produce a surplus and exchange it for the resources they require by developing and utilizing their limited domestic resources.
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