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Estimating the Gains from International Trade?

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Is it possible to estimate the gains from trade? Discuss when it can be estimated and when it can't.

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Solution Summary

It explains if gains from trade can be estimated or not.

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We can estimate the gains from trade when dealing with countries that have fixed exchange rates. A fixed exchange rate for a currency is set by the government and allowed to fluctuate only slightly (if at all) around the desired rate, called the par value. For example, Belize has fixed the exchange rate for the Belizean dollar at BZD 2.00/$1, and it has maintained this fixed rate ...

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