Question

Why should countries who have an absolute advantage in producing goods and services still engage in international trade?

Answer 1

Answer -

Absolute advantage means ability of a country to produce goods more efficiently than other countries.When any country produe a good with lower cost I.e.with few number of labours,with low wages,with less raw material ,in less time etc.than other countries it is treated as absolute advantage of that particular country for production of such specific goods.

Though countries engage in international trade activities these are expert in production of certain goods and excess quantity produced also exported by them to other countries. With low marginal costs than others,with less time,labour and material they can produce more quantity of certain specific goods so these countries have an absolute advantage in producing goods and services.