As a country moves from autarky to trade, the relative price of the country's export good Will __________ for home consumers, and the relative price of the country's import good __________ for home consumers.
A) fall; will rise
B) fall; also will fall
C) rise; also will rise
D) rise; will fall

Question

Quizplus · Accepted Answer

When a country moves from autarky (no trade) to trade, the relative price of the country's export good increases because the good is now being sold in international markets at potentially higher prices. Conversely, the relative price of the country's import good falls for home consumers because they can now purchase these goods from international markets, where the goods may be cheaper or of better quality for the same price.

As a Country Moves from Autarky to Trade, the Relative