If two countries are of unequal size:
A) the larger country gains more from trade.
B) the smaller country gains more from trade.
C) the terms of trade will equal the smaller country's opportunity costs of producing the two products.
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

The smaller country typically gains more from trade relative to its size because it can specialize in producing goods where it has a comparative advantage and then trade for goods it produces less efficiently, thus benefiting disproportionately from the trade.

If Two Countries Are of Unequal Size