3. Identify and describe the three most common reasons countries trade, and give an example of each of these trade motivations in action. (4 points)
A. Comparative Advantage: When a country can produce a good or service at a lower opportunity cost than another country.
Example: Country A has a comparative advantage in producing wine, while Country B has a comparative advantage in producing cheese. Therefore, Country A exports wine to Country B and imports cheese from Country B.
B. Access to Resources: When a country lacks certain resources that are abundant in another country.
Example: Japan imports oil from Saudi Arabia because Japan has limited natural oil reserves.
C. Economic Growth and Development: Trading can stimulate economic growth and development by providing markets for surplus goods and services.
Example: China exports manufactured goods to the United States, which helps drive China's economic growth.