In a two by two model of international trade, it is assumed that
- both countries could gain from trade at the same time, but the volume of the gains depends on terms of trade ✓
- both countries could gain from trade at the same time, and the volume of the gains does not depend on terms of trade
- both countries could gain from trade at the same time, but term of trade is inconsequential for the distribution of the gains
- neither country could ever gain from trade since term of trade is depends on the distribution of the gains from trade
Explanation
This answer correctly explains the economic concept. Economics studies how people make choices about limited resources.
The other options describe different economic ideas or situations. They don’t fit what this question asks.
Remember this economic principle when thinking about money, trade, and how markets work.