If a country allows trade and the domestic price of a good is higher than the world price,what will occur

Question

Quizplus · Accepted Answer

If the domestic price of a good is higher than the world price, it means that domestic producers are able to sell the good at a higher price than foreign producers. This creates an incentive for foreign producers to sell their goods in the domestic market, leading to an increase in imports. Thus, the country will become an importer of the good and trade at the world price, which is lower than the domestic price.

If a Country Allows Trade and the Domestic Price of a Good