The theory of reciprocal demand does not well apply when one country:
A) Produces under constant cost conditions
B) Produces along its production possibilities curve
C) Is of minor economic importance in the world marketplace
D) Partially specializes the production of its export good

Question

Quizplus · Accepted Answer

The theory of reciprocal demand assumes that both countries are of significant economic importance in the world marketplace and are able to influence international prices. Therefore, it does not apply when one country (in this case, choice C) is of minor economic importance. Choices A, B, and D do not directly relate to the theory of reciprocal demand.

The Theory of Reciprocal Demand Does Not Well Apply When