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Hello.
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So, to answer the question, the closer the equilibrium relative price to a country's autarkic domestic price ratio, the larger it is, excuse me, the larger its gain from trade.
00:14
True or false? so, the statement is generally true.
00:17
So, on the right -hand side, i'll write true.
00:19
The closer the equilibrium relative price, the price of one good in terms of another in international trade, is to a country's autarkic domestic price ratio, the price ratio without international trade.
00:35
The larger are its gains from trade.
00:38
This can be explained using a basic supply and demand graph in the context of international trade theory.
00:43
And i've drawn a graph preview to prove why this statement is generally true...