Given free trade, a large country tends to benefit the least from trade because:
A) large countries are more productive than small countries.
B) large countries are less productive than small countries.
C) large countries have higher incomes than smaller countries.
D) large countries will have terms of trade near the opportunity costs of the small country.
E) All of the above

Question

Quizplus · Accepted Answer

Large countries tend to have more influence on international prices due to their sizeable demand and supply, which can lead to terms of trade that are closer to the opportunity costs of the smaller trading partner. This can limit the benefits they derive from trade compared to smaller countries, which might experience more significant changes in terms of trade.

Given Free Trade, a Large Country Tends to Benefit the Least