If a Country Maintains Its Level of Exports to Another

question 65

Multiple Choice

If a country maintains its level of exports to another country under free trade,even after its world price is equalized and there are no international shortages or surpluses,it must have a

• A) comparative advantage in that good.
• B) comparative disadvantage in that good.
• C) lower domestic price for the good than would be the case if trade were not permitted.
• D) higher rate of domestic consumption of the good than would be the case if trade were not permitted.
• E) persistent domestic shortage of the good that necessitates a tariff on it.

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Definitions:

Variable Selling Expense

Costs related to selling products that vary with the level of sales activity, such as commissions.

Net Operating Income

A company's income after operational expenses have been deducted but before taxes and interest are considered.

Milling Machine Minutes

A measure of manufacturing time that represents the total minutes a milling machine is engaged in production.

Monthly Demand

The total quantity of a product or service that consumers are willing and able to purchase in a month.