Question

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of beans increases to equal the world price of beans, then A. at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. B. that country becomes an exporter of beans. C. that country has a comparative advantage in producing beans. D. All of the above are correct.

Answer 1

Answer: D

Explanation:

When country abandons a no-trade policy in favor of a free-trade policy. as a result, the domestic price of beans increases to equal the world price of beans, then at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. that country becomes an exporter of beans, that country has a comparative advantage in producing beans.