When will the domestic price of a product equal the world price
A)when the domestic supply of the product increases
B)when the country allows free trade
C)when trade restrictions are imposed on the product
D)when the country has a comparative advantage in producing the product

Question

Quizplus · Accepted Answer

The domestic price of a product will equal the world price when there is free trade, as there will be no barriers to prevent the domestic market from accessing global markets and competing with other producers on a level playing field. When trade is restricted, domestic prices can be artificially inflated or deflated, leading to market inefficiencies and potential harm to consumers and producers. Increasing domestic supply or having a comparative advantage in production may help to lower prices, but free trade is necessary for prices to align with global levels.

When Will the Domestic Price of a Product Equal the World