To Correctly Analyze the Welfare Effects of Free Trade on an Economy,what

question 99

Multiple Choice

To correctly analyze the welfare effects of free trade on an economy,what must economists assume

• A)that the country has a comparative advantage in the product
• B)that the country is the only producer of the product
• C)that the country is a price taker
• D)that the country has an absolute advantage in the product

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Definitions:

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the average cost per unit of output.

Homogeneous Products

Goods that are identical in quality and cannot be distinguished from one another by consumers.

Free Entry

Free entry is a market condition where businesses can enter and exit the market without facing significant barriers or costs.

Competitive Price-Taker

A firm or individual in a market structure that has no control over the market price and must accept the prevailing market price for its product or service.