If the world price for a good is above a nation's pre-trade equilibrium price,then the nation
A)will export the good.
B)will import the good.
C)will neither export nor import the good.
D)cannot gain from trade.
E)Both C and D.

Question

Quizplus · Accepted Answer

If the world price for a good is above a nation's pre-trade equilibrium price, it means that the nation can sell the good for a higher price in the world market than in the domestic market. This creates an incentive for producers to increase production and export the good in order to earn higher profits. Therefore, the nation will export the good.

If the World Price for a Good Is Above a Nation's