Suppose That the US Market for Soybeans Is Not Open

question 34

Multiple Choice

Suppose that the US market for soybeans is not open to international trade. Currently, soybeans sell for $6.00 per bushel in the US and the world price for soybeans is $8.00 per bushel. This information implies that

• A)​the US has an absolute advantage in the production of soybeans and if the market opens to international trade, the US would export soybeans.
• B)the US does not have an absolute advantage in the production of soybeans and if the market opens to international trade, the US would import soybeans.
• C)​the US has a comparative advantage in the production of soybeans and if the market opens to international trade, the US would export soybeans.
• D)​the US does not have a comparative advantage in the production of soybeans and if the market opens to international trade, the US would import soybeans.

---

Definitions:

Monthly Fixed Expense

Regular, unchanging expenses that occur on a monthly basis, such as rent or salaries, regardless of business activity levels.

Target Profit

The amount of net income a company aims to achieve for a specified period as part of its financial and operational goals.

Break-Even Sales

The amount of revenue needed to cover total fixed and variable expenses, resulting in a net profit or loss of zero.

Margin Of Safety

The difference between actual or projected sales and the break-even point, indicating the level of risk in failing to cover fixed and variable costs.