Developing Countries Have Often Argued That Their Terms of Trade

question 80

Multiple Choice

Developing countries have often argued that their terms of trade have worsened because

• A) their import prices have declined relative to their export prices.
• B) their import prices have risen relative to their export prices.
• C) their import prices and export prices have increased.
• D) their import prices and export prices have decreased.

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Definitions:

Product Differentiation

The process of distinguishing a product or service from others in the market to make it more appealing to a particular target market.

Oligopoly Model

An economic model describing a market structure where a few firms dominate, often leading to pricing and output decisions that consider competitors' actions.

Allocative Efficiency

A state of resource allocation where resources are distributed according to consumer preferences, often considered an optimal distribution of goods and services.

Prisoners' Dilemma

A scenario in game theory that demonstrates why two rational individuals might not cooperate, even if it appears that it is in their best interest to do so.