Asked by Clayton Kinzel on May 05, 2024
Verified
If a nation exports a product, then the price of that product in the nation
A) will rise above the domestic (no-trade) equilibrium price.
B) will fall below the domestic (no-trade) equilibrium price.
C) will remain the same as the domestic (no-trade) equilibrium price.
D) may either rise or fall, depending on the product.
Equilibrium Price
The price at which the quantity of a product offered is equal to the quantity of the product demanded.
Domestic Price
The price of goods or services within a country's borders, influenced by local supply and demand conditions.
Exports
Goods or services sold by a country to buyers located in other countries.
- Understand the impact of international trade on domestic market prices and equilibrium.
Verified Answer
KN
Kumari NeelamMay 12, 2024
Final Answer :
A
Explanation :
When a nation exports a product, it means that there is high demand for the product in other countries. As a result, the price of the product in the domestic market will increase above the equilibrium price, allowing producers to earn more profits. This is because producers can now sell their products at a higher price in the foreign market, which drives the domestic price of the product up.
Learning Objectives
- Understand the impact of international trade on domestic market prices and equilibrium.