Consider the Trade of a Product Between Two Regions

question 127

Multiple Choice

Consider the trade of a product between two regions.If it is very inexpensive to move the product from one regional market to another,then the

• A)"law of one price" argues that it will sell for the same price in all markets.
• B)price it sells for in every country will depend on the cost of labour in the single low-cost country in which the product was produced.
• C)difference in the price from one market to another will depend on the relative elasticities of supply in the separate markets.
• D)absolute cost of producing the product must be the same in all markets.
• E)production of the world supply will be from the single country with the lowest absolute cost of producing it.

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Definitions:

Output Market

The marketplace in which final goods or services are offered to consumers, businesses, and other entities.

Output Effect

A phenomenon where changes in price level influence the quantity of goods and services produced in an economy due to the alteration in profitability of goods sold.

Price Effect

The impact on consumer demand or supply of goods due to changes in the price of those goods or related goods.

Free Trade

An economic policy that allows imports and exports between countries with minimal or no tariffs, quotas, or prohibitions.