Asked by ricardo Velazquez on Jun 14, 2024
Verified
Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States will
A) have a domestic shortage of wheat.
B) export wheat.
C) import wheat.
D) neither export nor import wheat.
Domestic Price
The price of goods or services within a country's borders, as opposed to international or export prices.
World Price
The international market price of a good, influenced by global supply and demand.
Domestic Shortage
A situation where the demand for a product exceeds its supply within a country, leading to scarcity.
- Assess the role of local and international prices in shaping import and export trends.
Verified Answer
RK
Rohit KurianJun 18, 2024
Final Answer :
B
Explanation :
Since the world price is higher than the domestic price, it is profitable for U.S. producers to sell their wheat on the world market, leading to exports.
Learning Objectives
- Assess the role of local and international prices in shaping import and export trends.