If the price in the U.S. is higher than the price of identical good abroad before trade, after opening trade which of the following should occur?
A) U.S. should export the good.
B) U.S. should import the good.
C) U.S. should both import and export the good.
D) U.S. should not trade.

Question

Quizplus · Accepted Answer

When the price of a good is higher in the U.S. than abroad before trade, it indicates that the U.S. has a higher cost of production for that good compared to other countries. Therefore, upon opening trade, the U.S. would import the good from countries where it can be produced more cheaply.

If the Price in the U