Suppose that the world price of radios is above the no-trade domestic price. In that case, the country:
A) imports radios at the world price.
B) imports radios at the no-trade domestic price.
C) exports radios at the world price.
D) exports radios at the no-trade domestic price.

Question

Quizplus · Accepted Answer

When the world price of a good is above the no-trade domestic price, it means the domestic market can sell the good at a higher price internationally than it does domestically. Therefore, the country will export the good at the world price to take advantage of the higher prices available in the international market.

Suppose That the World Price of Radios Is Above the No-Trade