The Elasticity Approach to the Balance of Trade

question 1

Multiple Choice

The elasticity approach to the balance of trade:

• A) focuses on the effects of changing relative prices of domestic and foreign goods on the balance of trade.
• B) indicates that the elasticity of demand for exports is always perfectly inelastic.
• C) assumes a flexible exchange rate regime.
• D) All of the above are correct.

---

Definitions:

Competing

A conflict resolution style where one's own goals are pursued aggressively, sometimes at others' expense, emphasizing assertiveness over cooperativeness.

Commission-Based

A compensation method where payment is based on performance, typically a percentage of sales or profits generated by the employee's efforts.

Competitive Advantage

A condition or circumstance that puts a company in a favorable or superior business position.

Market Segmentation

The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors, who might require separate products or marketing strategies.