When a nation first begins to trade with other countries and the nation becomes an importer of corn,
A)this is an indication that the world price of corn exceeds the nation's domestic price of corn in the absence of trade.
B)this is an indication that the nation has a comparative advantage in producing corn.
C)the nation's consumers of corn become better off and the nation's producers of corn become worse off.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When a nation becomes an importer of a good, it indicates that the world price is lower than the domestic price, not higher. This means the nation does not have a comparative advantage in producing that good. Consumers benefit from lower prices, while domestic producers face increased competition.

When a Nation First Begins to Trade with Other Countries