In a market that moves from a situation of no trade to a situation where a good is imported, the price of the good ________ and the quantity produced by the domestic industry ________.

Question

Quizplus · Accepted Answer

In a situation where a good is imported, the competition from the foreign producers leads to a decrease in the price of the good. As a result, the domestic industry produces less of the good since it is more expensive to produce than to import. Therefore, the quantity produced by the domestic industry decreases, leading to a fall in the price of the good.

In a Market That Moves from a Situation of No