The Terms of Trade

question 42

Multiple Choice

The terms of trade

• A)equal the equilibrium price in a competitive market
• B)equal a nation's imports minus its exports
• C)determine whether specialization according to comparative advantage is economically rational
• D)are equal to 1.0 in market equilibrium
• E)determine how the gains from international trade are distributed among countries

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Definitions:

Elastic Demand

A situation where the demand for a product is sensitive to price changes.

Fresh Tomatoes

Refers to tomatoes that are recently harvested and have not been processed, often used in cooking for their flavor and nutritional value.

Highly Elastic

Referring to a situation where the quantity demanded or supplied responds significantly to changes in price.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers over a period of time.