When a country exports a good because the world price is higher than the no-trade domestic price,domestic purchases of the good ________ and domestic production of the good ________.
A) increase; increases
B) increase; decreases
C) decrease; increases
D) decrease; decreases
E) do not change; increases

Question

Quizplus · Accepted Answer

When a country exports a good because the world price is higher than the no-trade domestic price, domestic purchases decrease because consumers are facing higher prices, and domestic production increases to meet the higher demand from the international market.

When a Country Exports a Good Because the World Price