Final answer:
Firms may gain advantages from international trade through extreme specialization and economies of scale.
Step-by-step explanation:
There are two main advantages that firms may gain from engaging in international trade: extreme specialization and economies of scale.
Firstly, international trade allows firms to specialize in producing specific goods or services that they have a comparative advantage in. For example, a country with abundant natural resources may specialize in exporting raw materials, while another country with advanced technology may specialize in exporting manufactured goods. By focusing on what they do best, firms can increase efficiency and productivity, leading to higher profits.
Secondly, international trade provides firms with access to larger markets, enabling them to benefit from economies of scale. Economies of scale occur when a firm's average cost of production decreases as it produces more output. When firms can sell their products to a larger customer base, they can produce and sell a greater quantity, which reduces their average cost per unit and increases their profitability.