If a firm located in a country charges high prices on its exports and earns profits on its export sales, then:

Question

Quizplus · Accepted Answer

When a firm charges high prices on its exports and earns profits on its export sales, the high export price enhances the exporting country's terms of trade. This means that the exporting country can buy more imports with the same amount of exports, which can improve their economy. However, it is important to note that this does not necessarily mean that the majority of gains from international trade accrue to the foreign buyers.

If a Firm Located in a Country Charges High Prices