Part 1- Reasons for Trade Australia conducts its trade in the free trade format. ... Reasons for free trade are based on the economic concept of comparative advantage, which is the economic principle that nations should specialize in the areas of production in which they have the lowest opportunity cost and trade with other nations, so as to maximize both nations' standards of living. ... Trade also leads to greater levels of specialization which in turn will result in economies of scale, which will lower average costs of production and increase efficiency and productivity even further. ...

• Word Count: 1180
• Approx Pages: 5
• Grade Level: Undergraduate