Relative to a No-Trade Situation,what Effect Will Exporting a Good

question 221

Multiple Choice

Relative to a no-trade situation,what effect will exporting a good to foreign nations have on the domestic market for the good?

• A)Equilibrium price will rise,domestic production will fall,and domestic consumption will fall.
• B)Equilibrium price will rise,domestic production will rise,and domestic consumption will fall.
• C)Equilibrium price will fall,domestic production will fall,and domestic consumption will increase.
• D)Equilibrium price will fall,domestic production will rise,and domestic consumption will increase.

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Definitions:

Variable Factors

Components of production that can be adjusted in the short term to change the output level, such as labor and raw materials.

Economies of Scale

A situation where the cost of producing one unit of a good decreases as the volume of production increases.

Diseconomies of Scale

The phenomenon where, beyond a certain point, the cost per unit increases as a company continues to grow in size and output.

Per-Unit Cost

The average cost for each product produced, calculated by dividing the total production costs by the total units produced.