Suppose foreign shrimp prices drop by 32 percent and importers gain a 90 percent market share. From this information, what would economists strongly suspect about this industry?
A) Foreigners have a comparative advantage in shrimping.
B) Americans have a comparative advantage in shrimping.
C) Foreign sellers probably are colluding on price to maximize profits.
D) The large sales of foreigners indicate that they are better strategic bargainers than Americans are.

Question

Quizplus · Accepted Answer

Economists would suspect that foreigners have a comparative advantage in shrimping, as the significant drop in prices and the large market share suggest they can produce shrimp more efficiently and at a lower cost than domestic producers.

Suppose Foreign Shrimp Prices Drop by 32 Percent and Importers