Trade allows each country to take advantage of lower opportunity costs in the other country.
Advantage is something that helps to make someone or something better or more likely to succeed than others (such as a favorable position or circumstance).
The net exports of a nation are determined by its exports less its imports, and are consequently influenced by all the variables that influence global trade. These include trade policy, exchange rates, foreign currency reserves, factor productivity and endowments, inflation, and demand.
Therefore, Each nation can benefit from lower opportunity costs in the other nation thanks to trade. Mexico must consider its local opportunity costs and scale back shoe production if it wishes to increase refrigerator output without engaging in trade.
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