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JAMB Economics 2007 Question 36

Question 36

International Trade

The gains from international trade are shared on the basis of the

  1. A.quantity produced of each of the traded goods
  2. B.cost of production of each of the traded goods
  3. C.terms of trade
  4. D.bilateral trade agreements
Show the answer and explanation

Answer: C (terms of trade)

Explanation

The terms of trade (the rate at which exports exchange for imports) decide how much of the gain from trade each country gets.