Some time ago,the nation of Republica opened up its paper market to international trade.Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?
A)The price of paper in Republica decreased as a result of the policy change.
B)Republica began exporting paper as a result of the policy change.
C)The domestic demand curve for paper shifted to the right as a result of the policy change.
D)The domestic quantity of paper demanded increased as a result of the policy change.

Question

Quizplus · Accepted Answer

If Republica has a comparative advantage in producing paper, it is likely that they would begin exporting paper once the market opened up to international trade. This means that other countries are willing to buy paper from Republica, indicating that Republica can produce paper at a lower cost or with higher quality than other countries. The other options do not necessarily indicate comparative advantage - A could be due to increased competition, C could be due to a general increase in demand, and D could be due to general economic growth.

Some Time Ago,the Nation of Republica Opened Up Its Paper