Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of beans increases to equal the world price of beans,then
A)that country becomes an exporter of beans.
B)that country has a comparative advantage in producing beans.
C)at the world price,the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When the domestic price rises to the world price, it indicates that the country can sell beans at a higher price internationally, suggesting it becomes an exporter (A). This implies a comparative advantage in producing beans (B), and the supply exceeds domestic demand at the world price (C).

Suppose a Country Abandons a No-Trade Policy in Favor of a Free-Trade