For a given country, comparing the world price of aluminum and the domestic price of aluminum before trade indicates whether that country's demand for aluminum exceeds the demand for aluminum in other countries.

Question

Quizplus · Accepted Answer

Comparing the world price of aluminum to the domestic price before trade indicates whether the country is a net importer or exporter of aluminum, not whether its demand exceeds that of other countries. Demand is determined by the quantity of aluminum that consumers in the country want to buy at various prices, not by the comparison of prices.

For a Given Country, Comparing the World Price of Aluminum