Question

The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there was $3.00. Once Uruguay began allowing trade in almonds with other countries, Uruguay began A. exporting almonds and the price per pound in Uruguay remained at $3.00. B. exporting almonds and the price per pound in Uruguay increased to $4.50. C. importing almonds and the price per pound in Uruguay remained at $3.00. D. importing almonds and the price per pound in Uruguay increased to $4.50.

Answer 1

Answer:

The correct answer is option B.

Explanation:

The world price of a pound of almonds is $4.50.

During autarky, the price of almonds in Uruguay is $3.

Once Uruguay opens trade with other countries, since the price of almonds is lower in Uruguay than the world price, Uruguay will export almonds to the world. With the opening up of trade, the price will rise to $4.50.