In the modern trade theory, the gains from international trade are clearly differentiated between
A)The gains from exchange and the gains from specialization
B)The gains from exchange and income
C)The gains from exchange and price
D)All of the above

Question

Quizplus · Accepted Answer

Modern trade theory distinguishes between the gains from exchange, which arise due to differences in consumers' preferences or endowments, and the gains from specialization, which result from differences in countries' production efficiencies or technologies.

In the Modern Trade Theory, the Gains from International Trade