Read the passage and answer the questions:
International Trade
International trade is the result of specialisation in production. It is based on the principle of comparative advantage, complimentarity and transferability of goods and services. Undertaking international trade is mutually beneficial to nations if it leads to regional specialisation, higher level of production, better standard of living, worldwide availability of goods and services, equalisation of prices and wages and diffusion of knowledge and culture.
International trade can prove to be detrimental to nations if it leads to dependence on other countries, uneven levels of development, exploitation, and commercial rivalry leading to wars. Global trade affects many aspects of life; it can impact everything from the environment to health and well-being of the people around the world. As countries compete to trade more, production and the use of natural resources spiral up, resources get used up faster than they can be replenished.
As a result, marine life is also depleting fast, forests are being cut down and river basins sold off to private drinking water companies. Multi-national corporations trading in oil, gas mining, pharmaceuticals and agri-business keep expanding their operations at all costs creating more pollution – their mode of work does not follow the norms of sustainable development. If organisations are geared only towards profit making, and environmental and health concerns are not addressed, then it could lead to serious implications in the future.
International Trade will NOT occur due to which of the following?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Non-complimentarity
Option (1) Specialisation in production — Incorrect. International trade is the result of specialisation. A country that specialises produces more of a few goods than it needs and less of others, so it has a surplus to sell and a shortfall to buy; specialisation creates trade, it does not stop it.
Option (2) Comparative advantage — Incorrect. Trade is based on the principle of comparative advantage. A country makes what it can produce at relatively lower cost and buys the rest from countries that make them cheaper, so both sides gain by exchanging; this too leads to trade.
Option (3) Non-complimentarity — Correct. Complimentarity (spelt so in the passage; usually written complementarity) means that one country has what the other needs, and the other way round. Trade rests on it: the need of one is met by the surplus of the other. If the two countries’ goods do not complement each other, neither needs what the other offers, there is no buyer for either surplus, and trade will not occur.
Option (4) Transferability of goods and services — Incorrect. Trade is based on the transferability of goods and services, the ease of moving them from one country to another. A surplus is of use to a buyer only if it can reach him, so easy transfer makes trade possible.
Note: The passage is NCERT’s section ‘Concerns Related to International Trade’ from the chapter ‘International Trade’ (Fundamentals of Human Geography), almost word for word, with the opening lines of ‘Why Does International Trade Exist?’ put in front. NTA’s ‘unseen’ passage on the worries of trade was the trade chapter’s own page in a new frame. Read those two short paragraphs slowly at home, and all five questions will feel like old friends.
NCERT (2025-26): “Why Does International Trade Exist? International trade is the result of specialisation in production. It benefits the world economy if different countries practise specialisation and division of labour in the production of commodities or provision of services. Each kind of specialisation can give rise to trade. Thus, international trade is based on the principle of comparative advantage, complimentarity and transferability of goods and services and in principle, should be mutually beneficial to the trading partners.…” |