Gains from trade refer to the increase in:

A. savings in both countries that result from specialization and trade.

B. income in both countries that results from specialization and trade.

C. resources in both countries that result from specialization and trade.

D. surplus in both countries that results from specialization and trade.

Question

Business

Krish Abbott

29 January, 06:10

Gains from trade refer to the increase in:

A. savings in both countries that result from specialization and trade.

B. income in both countries that results from specialization and trade.

C. resources in both countries that result from specialization and trade.

D. surplus in both countries that results from specialization and trade.

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Answers (1)

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Gregory Lloyd · Answer 1

D. surplus in both countries that results from specialization and trade.

Explanation:

In economics, gains from trade can be described as the net benefits that are derived by economic agents from different countries when they are given the opportunity to voluntarily trade with each other.

Technically in economics, gains from trade refers to the increase in the total surplus which is the addition of consumer surplus and producer surplus that results from decrease in trade tariffs, removal of trade prohibition or quota, or any other trade liberalization measures.

Therefore, gains from trade refer to the increase in surplus in both countries that results from specialization and trade.