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The Answer is The economist's distinction between "potential" gains from trade and "actual" gains from trade is based on the idea that while trade has the potential to benefit both parties involved, the actual realization of those benefits depends on various factors such as market conditions, negotiation skills, and the specific terms of the trade agreement.

When the economist refers to "potential" gains from trade, they are highlighting the theoretical benefits that could be achieved if trade were to occur under ideal conditions. These potential gains are based on the concept of comparative advantage, where each party specializes in producing the goods or services in which they have a relative efficiency, and then trades with each other to maximize overall output and consumption.

However, the gains from trade are only "potential" because they are not guaranteed to be fully realized in practice. In reality, there may be barriers to trade such as tariffs, quotas, or transportation costs that limit the extent to which the potential gains can be actualized. Additionally, there may be asymmetries in bargaining power or information between the parties involved, leading to an unequal distribution of the gains from trade.

Therefore, while the potential gains from trade provide a theoretical framework for understanding the benefits of trade, the actual gains from trade are contingent on a range of real-world factors that can impact the outcome of trade negotiations and agreements.

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