In economics, gains from trade are the net benefits to economic agents from being allowed an increase in voluntary trading with each other. In technical terms, they are the increase of consumer surplus plus producer surplus from lower tariffs or otherwise liberalizing trade.

What is the source of gains from trade?

Comparative advantage, rather than Absolute advantage is the source of gains from trade. As long as relative production costs of goods differ, trading partners will be able to gain from trade.

What is terms of trade gains?

Terms of trade (TOT) represent the ratio between a country's export prices and its import prices. ... When the TOT is greater than 100%, the country is accumulating more capital from exports than it is spending on imports.