题目内容
The theory of reciprocal demand asserts that as the U.S. demand for Canadian wheat rises, the equilibrium terms of trade improve for the United States.
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AssumethatCanadahasacomparativeadvantageinwheatandacomparativedisadvantageinautos.AstheCanadiandemandforwheatincreases,Canada'sequilibriumtermsoftradeimproves.
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.
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