Economics Marginal Utility Questions
The marginal utility of international trade affects the gains from trade by increasing overall utility and welfare. When countries engage in international trade, they can access a wider variety of goods and services, leading to an increase in consumer satisfaction and utility. The marginal utility of each additional unit of a good or service obtained through trade decreases, but the overall utility and welfare of both trading partners increase due to the principle of comparative advantage. This allows countries to specialize in producing goods and services in which they have a lower opportunity cost, leading to increased efficiency and higher gains from trade.