Suppose a Country Abandons a No-Trade Policy in Favor of a Free-Trade

question 272

Multiple Choice

Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of pistachios decreases to equal the world price of pistachios,then

• A)that country becomes an exporter of pistachios.
• B)that country has a comparative advantage in producing pistachios.
• C)at the world price,the quantity of pistachios demanded in that country exceeds the quantity of pistachios supplied in that country.
• D)All of the above are correct.

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Definitions:

Technological Advances

Innovations and improvements in technology that enhance productivity, efficiency, or quality.

Capital-Using

Pertaining to processes or technologies that involve an increase in the amount of capital used per unit of output.

Net Investment

The total amount spent on new capital assets minus the depreciation of existing assets, reflecting the actual increase in an entity's capital stock.

Vicious Circle Of Poverty

A problem common in some developing countries in which their low per capita incomes are an obstacle to realizing the levels of savings and investment needed to achieve rates of growth of output that exceed their rates of population growth.