According to the supply and demand framework in the text, an increase in import trade tends to ______ domestic production of a good.
A) increase
B) decrease
C) hold constant
D) have an indeterminate effect on

Question

Quizplus · Accepted Answer

An increase in import trade means that foreign producers can sell their goods in the domestic market at a lower price than domestic producers. This leads to a decrease in domestic demand for the domestic product, which in turn leads to a decrease in domestic production of that good. Therefore, an increase in import trade tends to decrease domestic production of a good.

According to the Supply and Demand Framework in the Text