The World Price of a Commodity Will Settle at the Level

question 191

Multiple Choice

The world price of a commodity will settle at the level where

• A)supply and demand are equal within each country.
• B)the excess demand of the importing country is equal to the excess supply of the exporting country.
• C)the excess demand in the exporting country is equal to the excess demand in the importing country.
• D)there is no excess demand in the exporting country.

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Definitions:

Market Supply

The total quantity of a good or service that producers are willing and able to sell at a given price in a given period.

Equilibrium Price

The market price at which the quantity supplied of a good equals the quantity demanded, leading to a stable market condition.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price during a specific period.

Production Costs

Expenses incurred in the process of creating a product or service, including raw materials, labor, and overheads.