If the supply curve of a commodity is upward sloping, and the producing country begins to export more in a pure free trade system, the domestic price of the commodity will
A)fall.
B)rise.
C)exceed the price in foreign countries.
D)be below the price in foreign countries.

Question

Quizplus · Accepted Answer

When a country starts exporting more of a commodity in a pure free trade system, the domestic supply available for local consumption decreases because a portion of it is now being sent abroad. Given an upward sloping supply curve, a reduction in domestic supply leads to an increase in the domestic price of the commodity.

If the Supply Curve of a Commodity Is Upward Sloping