If the world price of a good is below the no-trade domestic price,a country
A) will benefit from exporting the good.
B) will benefit from importing the good.
C) cannot benefit from trade.
D) has a comparative advantage in the production of that good.
E) will not engage in trade for that good.

Question

Quizplus · Accepted Answer

If the world price of a good is below the no-trade domestic price, it means that other countries can produce the good at a lower cost. Therefore, it is beneficial for the country to import the good from other countries at a lower price instead of producing it domestically at a higher cost. Importing the good from other countries will also increase competition in the domestic market, which may lower prices for consumers.

If the World Price of a Good Is Below the No-Trade