If good A costs $10 per unit in country A and $12 per unit in country B, and if transport costs between A and B for the good are $3 per unit, an economist would say that
A) the good will be exported from A to B.
B) the good will be exported from B to A.
C) intra-industry trade will occur in the good.
D) the good will be a "nontraded good."

Question

Quizplus · Accepted Answer

The total cost of exporting the good from country A to B would be $13 per unit ($10 + $3), which is higher than the cost of the good in country B ($12). Therefore, it would not be economically viable to export the good, making it a "nontraded good."

If Good a Costs $10 Per Unit in Country a and $12