Suppose a Country Abandons a No-Trade Policy in Favor of a Free-Trade

question 272

Multiple Choice

Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of pistachios decreases to equal the world price of pistachios,then

• A)that country becomes an exporter of pistachios.
• B)that country has a comparative advantage in producing pistachios.
• C)at the world price,the quantity of pistachios demanded in that country exceeds the quantity of pistachios supplied in that country.
• D)All of the above are correct.

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Definitions:

Laissez-Faire

An economic philosophy of free-market capitalism that opposes government intervention.

Socialist

A person who advocates for or supports the political and economic theory of socialism, which emphasizes public or community ownership and administration of the means of production and distribution of goods.

Utopian

Relating to an imagined perfect society where everything is ideal, often used to describe unrealistic or idealized concepts for societal organization.

Self-Interest

Acting in a way that is most personally beneficial, often used in economics to describe behavior in markets.