1 Answer | Add Yours
If all companies around the world bought American-made products, world trade as a whole would decline and the world would be worse off. The reason for this is comparative advantage. Various countries have a comparative advantage in various products. A country that has a comparative advantage makes the product at a lower opportunity cost. When all countries make products in which they have a comparative advantage (and then trade), more goods are made world-wide. If only the US were making goods, the benefit of comparative advantage would be lost and fewer goods would be made cumulatively by the countries of the world.
We’ve answered 319,862 questions. We can answer yours, too.Ask a question