Question

For trade to work out properly, _____.

both parties should be making about the same profit from the exchange
one party should have an absolute advantage while the other should have a comparative advantage
both parties should have an absolute advantage
both parties should have a comparative advantage

Answer 1

The correct answer is both parties should have a comparative advantage

Step-by-step explanation:

Answer 2

The correct answer is both parties should have a comparative advantage

In a comparative advantage, you can negotiate for what you have. For example, you have bread and the person you are trading with has money. Your advantage is that he doesn't have bread and needs it, and his is that he doesn't need money and he has it. Therefore, you both have an advantage over each other which leads to a good trade.