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Both Germany and India Produce Gadgets

Question 220

Multiple Choice

Both Germany and India produce gadgets. Germany sells gadgets for $200 each and India sells them for $100 each. If there was free trade between the two countries, then


A) Germany would sell some of its gadgets in India, which would lower supply in Germany, and Germans would end up paying a price above $200.
B) India would sell some of its gadgets in Germany, which would lower supply in India, and Indians would end up paying a price above $100.
C) India would sell all of its gadgets in Germany, pushing down the supply in India to zero.
D) Both Germany and India should abstain from trade, since it would be detrimental to both countries.

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