If free trade is allowed, a country will export a good if the world price is
A) above the before-trade domestic price of the good.
B) below the before-trade domestic price of the good.
C) equal to the before-trade domestic price of the good.
D) equal to the price elasticity of supply of the good

Question

Quizplus · Accepted Answer

If the world price is above the before-trade domestic price of the good, it means that the country can sell the good at a higher price than they were previously able to domestically. This creates an incentive for producers to increase production in order to gain higher profits through exports.

If Free Trade Is Allowed, a Country Will Export a Good