Suppose the world price of a good is $4. Based on the table below, the country will

Question

Quizplus · Accepted Answer

According to the table, the domestic price without trade is $3. In this case, the domestic price is lower than the world price. Thus, the country will import the good in order to take advantage of the lower price. The difference between the domestic price and the world price is $1, which represents the amount of gain from trade. The country can gain a total of $1 x 20 units = $20 from importing 20 units of the good. Therefore, the country will import 20 units.

Suppose the World Price of a Good Is $4