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

question 134

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 beans increases to equal the world price of beans,then

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

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Definitions:

Hypothetical Nations

Imaginary countries used in theoretical models or scenarios to illustrate economic principles or theories.

Imported Goods

Products or services brought into one country from another, contributing to a country's supply of goods, affecting domestic markets, trade balances, and consumer choices.

Protective Tariffs

Taxes imposed on imported goods to protect domestic industries from foreign competition by making the imported goods more expensive.