If a Country Produces a Commodity in the Range of Decreasing

question 22

Multiple Choice

If a country produces a commodity in the range of decreasing returns to scale, and the country begins to export more in a pure free trade system, the domestic price of the commodity will

• A)fall.
• B)rise.
• C)exceed the price in foreign countries.
• D)be below the price in foreign countries.
• E)One cannot predict the impact on the price of the commodity.