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Chapter 21: Q. 35 (page 522)

Who gains and who loses from trade?

Short Answer

Expert verified

Gainers- Consumers.

Losers- Producers (domestic).

Step by step solution

01

Step1. Introduction

International trade refers to the exchange of goods and services between countries.

02

Step2. Explanation

Consumers are the gainers of international trade because international trade allows consumers to purchase goods and services at low prices. Trade leads to a decrease in prices because of competition from foreign producers. This increases their purchasing power as they can buy goods at lower prices.

Producers (domestic) are the losers of international trade. Trade leads to a decrease in prices as producers face competition from foreign producers which leads them to decrease in prices.

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