If the World Price of Coffee Is Lower Than Colombia's

question 32

Multiple Choice

If the world price of coffee is lower than Colombia's domestic price of coffee without trade,then Colombia

• A)should import coffee.
• B)has a comparative advantage in coffee.
• C)should produce just enough coffee to satisfy domestic demand.
• D)should produce no coffee domestically.

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Definitions:

Infinite Elasticity

A theoretical situation where the quantity demanded or supplied of a product responds infinitely to changes in price; essentially, the smallest price change can lead to an unlimited demand or supply.

Excise Tax

A tax charged on specific goods and services, such as gasoline, tobacco, and alcohol.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied, typically upward sloping.

Sales Tax

A tax levied on the sale of goods and services, typically calculated as a percentage of the purchase price.