If the world price is less than the domestic price of a commodity in a closed economy,when that economy begins to trade,the economy will __________ the commodity.

Question

Quizplus · Accepted Answer

If the world price is less than the domestic price, it means that other countries are able to produce the commodity at a lower cost. If the closed economy starts trading, it would become more cost-effective to import the commodity from other countries rather than producing it domestically. Therefore, the economy would become a net importer of the commodity, choosing to import the commodity from other countries.

If the World Price Is Less Than the Domestic Price