At some point, as the price of the exported product is bid up and the price of the imported product falls, the price of the product in both nations:
A) becomes more unequal.
B) approaches zero.
C) approaches infinity.
D) equalizes.

Question

Quizplus · Accepted Answer

As the price of the exported product increases and the price of the imported product decreases, it will eventually reach a point where the prices will equalize in both nations. This is because if the price difference between the two nations becomes too large, it will create an incentive for individuals or companies to start importing the cheaper product and exporting the more expensive product. This will increase the supply of the imported product and decrease the supply of the exported product, causing their prices to move closer together until they equalize.

At Some Point, as the Price of the Exported Product