Asked by
trent rorabaugh
on Dec 12, 2024
Verified
In Figure 17-1, in the absence of trade, the domestic price of shoes would be Pn. If the United States moved from a no-trade situation to free trade, which of the following would happen?
A) The domestic price of shoes would rise, and domestic consumption would fall.
B) Both the domestic price of shoes and domestic consumption would rise.
C) Both the domestic price of shoes and domestic consumption would fall.
D) The domestic price of shoes would fall, and domestic consumption would rise.
No-Trade Situation
A scenario in which either due to policy decisions, protectionist measures, or lack of comparative advantage, countries or entities do not engage in international trade with each other.
Domestic Price
The price of goods or services within a country's borders, influenced by local demand and supply conditions.
Shoes
Footwear created to protect and comfort the human foot while doing various activities, also serving as an item of decoration or fashion.
- Recognize the impact that foreign trade has on the cost and supply of goods in domestic markets.
- Discern the value of comparative advantage and its impact on trade across nations.
Verified Answer
SS
Learning Objectives
- Recognize the impact that foreign trade has on the cost and supply of goods in domestic markets.
- Discern the value of comparative advantage and its impact on trade across nations.