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AssumethatCanadahasacomparativeadvantageinwheatandacomparativedisadvantageinautos.AstheCanadiandemandforwheatincreases,Canada'sequilibriumtermsoftradeimproves.
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The theory of reciprocal demand best applies when two countries are of equal economic size, so that the demand conditions of each nation have a noticeable impact on market prices.
The theory of reciprocal demand best applies whe one country has a " large " economy and the other country has a "small" economy.
If two nations of approximately the same size and with simalar taste patterns participate in international trade, the gains from trade tend to be shared about equally between them.
The expression "importance of being unimportant" suggests that if one nation is much large than the other, the larger nation realizes most of the gains from trade while the smaller nation realizes fewer gains from trade.
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