As a Nation Opens Trade, the Relative Prices of Products

question 5

Multiple Choice

As a nation opens trade, the relative prices of products it imports will __________ and the relative prices of products it exports will ___________.

• A) rise; fall
• B) fall; rise
• C) remain constant; fall
• D) rise; remain constant

Identify and calculate socially optimal quantities and prices in markets affected by externalities.

Analyze the effects of positive and negative externalities on private and social costs and benefits.

Evaluate the role of government interventions such as taxes, subsidies, and regulations in correcting market inefficiencies caused by externalities.

Distinguish between private and social values/costs in the context of externalities.

---

Definitions:

Committed

Describes a state of being dedicated or loyal to a cause, activity, or mission.

Duplex Mind

A concept suggesting the mind has two different processing systems, one automatic and unconscious, and the other deliberate and conscious.

Automatic System

A cognitive system that operates quickly and without conscious effort, responsible for fast and intuitive reactions and judgements.

Conscious System

Refers to the parts of the mind that are aware of surroundings, thoughts, and feelings at any given moment.