In the diagram in Question #16 above, suppose that this country is opened to trade from This initial situation where the dashed line indicates autarky prices [(PX/PY) autarky]. With This opening to trade,
A) the country can gain from trade if PX/PY on the world market is less than (PX/PY) autarky But cannot gain from trade if PX/PY on the world market is greater than (PX/PY) autarky.
B) the country can gain from trade if PX/PY on the world market is greater than (PX/PY) autarky but cannot gain from trade if PX/PY on the world market is less than (PX/PY) autarky.
C) the country can gain from trade if PX/PY on the world market is less than (PX/PY) autarky And also can gain from trade if PX/PY on the world market is greater than
(PX/PY) autarky.
D) the country cannot gain from trade if PX/PY on the world market is less than (PX/PY) autarky and also cannot gain from trade if X/PY on the world market is Greater than (PX/PY) autarky.
Correct Answer:
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