If country A's (P_X/P_Y) in autarky is greater than the (P_X/P_Y) on the world market, then, as the country moves from autarky to trade, the relative price of good X facing A's producers will __________, and A's producers will hence want to shift their production toward producing __________. A) decrease; more of good X and less of good Y B) decrease; more of good Y and less of good X C) increase; more of good X and less of good Y D) increase; more of good Y and less of good X

Question

Quizplus · Accepted Answer

The relative price of good X will decrease when moving from autarky to trade, leading producers to shift production towards the good that has become relatively more expensive, which is good Y.

If Country A's (PX/PY) in Autarky Is Greater Than the (PX/PY)

If Country A's (P_X/P_Y) in Autarky Is Greater Than the (P_X/P_Y)