If a Country Allows Trade And, for a Certain Good

question 33

Multiple Choice

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,

• A) the country will be an exporter of the good.
• B) the country will be an importer of the good.
• C) the country will be neither an exporter nor an importer of the good.
• D) Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

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Definitions:

Marginal Cost

The increase or decrease in the total cost of a production run for making one additional unit of an item.

Marginal Benefit

The additional satisfaction or utility gained by consuming an extra unit of a good or service.

Diamond

A naturally occurring gemstone composed of carbon, known for its hardness and brilliance, often used in jewelry.

Marginal Analysis

The examination of the costs and benefits of a small (marginal) change in the production of goods or services.