1. Assume countries A and B produce apples and oranges. The internal terms of trade in A are, 2 apples per one orange, and in B, 4 apples per one orange. The international terms of trade settled at 2.5 apples per one orange and A and B engaged in international trade with one another. Assume that the international terms of trade change to 5 apples per one orange, then under the new state of affairs:
3. a.International trade continues, country B benefits and A loses
5. b.International trade continues and both countries benefit
7. c.International trade will stop and both countries stand to lose.
9. d.International trade continues, country A benefits and B loses