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A.
both countries could gain from trade at the same time, but term of trade is inconsequential for the distribution of the gains
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B.
both countries could gain from trade at the same time, but the volume of the gains depends on terms of trade
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C.
neither country could ever gain from trade since term of trade is depends on the distribution of the gains from trade
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D.
both countries could gain from trade at the same time, and the volume of the gains does not depend on terms of trade
Correct Answer: Option B
Explanation
The model emphasizes the export of goods requiring factors of production that a country has in abundance. It also emphasizes the import of goods that a nation cannot produce as efficiently. It takes the position that countries should ideally export materials and resources of which they have an excess, while proportionately importing those resources they need.
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