Any terms of trade within the limits set by domestic opportunity costs will be mutually harmful, because each country tries to push the other as close to the limits of the terms of trade as possible.

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Business

Cesar Downs

11 July, 10:26

Any terms of trade within the limits set by domestic opportunity costs will be mutually harmful, because each country tries to push the other as close to the limits of the terms of trade as possible.

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Waylon Huynh · Answer 1

Answer: "because each country tries to push the other as close to the limits of the terms of trade as possible"

Explanation: This means that the opportunity costs of each country is being considered and cannot be violated by moving past the limits of the terms of trade. In other words, each country is poised to gain by not failing to keep the alternative (opportunity cost) goods bought from the other country equal or less in value to the sales to that country.