Canada Is Both an Importer and an Exporter of Automobiles

question 52

Multiple Choice

Canada is both an importer and an exporter of automobiles.If Canada exports more automobiles than it imports,and the price of automobiles rises,then ceteris paribus,Canada's terms of trade will likely

• A)improve because the index of export prices would rise and the index of import prices would fall.
• B)remain the same because the index of export prices would rise by the same amount as the index of import prices.
• C)deteriorate because of the loss of exports that would result.
• D)deteriorate because the loss of exports would be more than offset by the gain in imports.
• E)improve because the index of export prices will rise more than the index of import prices.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the amount consumers are willing to buy at various prices.

Elasticity Coefficient

A measure that indicates how much the quantity demanded of a good or service changes in response to a change in price.

Average Revenue

The revenue a company receives for selling one unit of a product, or the total revenue divided by the quantity of products sold.

Product Differentiation

A marketing strategy that involves distinguishing a product or service from others in the market to attract a specific target audience.