Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States
Will

Question

Quizplus · Accepted Answer

When the world price of a good is higher than the domestic price, the country will export that good to take advantage of the higher prices available in international markets. In this case, since the world price of wheat is $4.00 a bushel, which is higher than the domestic price of $3.50 a bushel in the United States, the U.S. will export wheat.

Suppose the Domestic Price (No-International-Trade Price) of Wheat Is $3