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Chapter 20: Q. 16 (page 494)

Are the gains from international trade more likely to be relatively more important to large or small countries?

Short Answer

Expert verified

Gains from international trade are more important to smaller nations than larger nations.

Step by step solution

01

Step 1. International Trade.

The exchange of goods and services across international borders or territories is called international trade.

02

Step 2. Gains from trade smaller or large countries.

Gains from international trade are more important to smaller nations than larger nations. Larger nations benefit from internal trade but the smaller nations do not have that high internal trade. The smaller nations in the absence of international trade will lose out on the benefits of trade such as economies of scale, splitting up the value chain, etc.

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