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Gross Barter Terms of Trade The gross terms of trade is the ratio quantity of imports index to the quantity of exports index. Thus, if To stands for gross terms of trade, M for imports and X for exports, then gross terms of trade is expressed as, M X The higher the ratio of imports to exports, the better the terms of trade. The quantity index of imports and exports for the base year will always be equal to 100. Base year is used to measure changes in the gross terms of trade in any given year. Net Barter Terms of Trade Net barter terms of trade is the ratio of price indices of exports to imports of a country. Symbolically, X2 = P TN M where X, and M are price index numbers of exports and imports respectively, Ty stands for net barter terms of trade. Improvement in this terms of trade would mean increase in the economic welfare of the country. 295. A monopolist is currently selling 3 units at a price of $5. If the firm lowers the price to $4, a total of 4 units will be sold. The firm calculates that the marginal revenue of the fourth unit is which is the price of the fourth unit. (A) $1; less than (B) $16; greater than (C) $4; equal to (D) -$1; less than (E) $3; less than

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