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 is result of ___________ .
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → specialisation in production
Option (1) specialisation in production — Correct. International trade is the result of specialisation in production. Countries practise specialisation and division of labour in producing goods or services; each sells what it specialises in and buys the rest, so each kind of specialisation gives rise to trade.
Option (2) specialisation in distribution — Incorrect. Distribution only moves goods; a country’s surplus comes from what it specialises in producing.
Option (3) specialisation in consumption — Incorrect. Trade widens what people consume; it does not narrow it to one speciality.
Option (4) specialisation in redistribution — Incorrect. Sharing out income again among people does not explain why countries trade.
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.…” |