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Terms of Trade and the Gains from Specialization based on Comparative Advantage

Terms of Trade and the Gains from Specialization based on Comparative Advantage

When countries specialize their production and trade with other countries, they stand to enjoy great benefits. This video introduces the concept of "terms of trade" or a "trading price", which demonstrates how a country can enjoy cheaper goods, and actually consume beyond its production possibilities curve, when it trades with other goods.

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