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CLOTH o We' B We Fig. 2. Pe Wi Wi' WHEAT P TET Borore Trades After Trado Change ow, Whent Production Cloth Production Wbcal export ow, , WW, cc; ww Cloth impon ow OC, OC, What campion OW, W.W Cloth consumption cc Keeled: Cloth Production oc, Wheat Production ow, ow, ww, (5) What export CC: Cloth import Ww Wheat conse mption OC CC, Cloth crempton OW aw, ww Csins from international trade arc clear from the bad that India now obtains more cloth for every unit of undar od than before usade, the slope of TT is greater than II. S.larly, England nownhtrim mum where Sesery unit of clerle surrendered than befor: trde; the slope of TT is less dan FF As long as each country is able to consuma along the line of international exchange raio (TT) rather than its own kne of domestic exchange RD UI for India and E. for England), both the condities will gain in welfare. Summary of Gains from Ince mational Trade Various gains from international trade can be summariseed below: It cncourages territorial dission of labour or in relial specialiutien les opcomics of sande are realised from expanded Dukets 0 International specialisation and economies in production lead to increase in productivity, low costs Ead cheaper prices on International trade increases realiucarne and consumption. This leads to expansion of comployment and evitput and promotes economo growth QUESTIONS 1. What do you understand by gains from international trade ? Illustrate gains from trade through suitable examples and diagrams 2 How can gains from trade be measured ? What factors affect the distribution of gains ? 1. How does gain from international trade arise ? How is it shared by trading countries? 4 What is meant by terms of trade ? How are they determined ? 5. What are terms of trade? What are the factors influencing terms of trade