Question

When the nation of Ectenia opens itself to world trade in coffee beans, the domestic price of coffee beans falls.Which of the following describes the situation?a. Domestic production of coffee rises, and Ectenia becomes a coffee importer.b. Domestic production of coffee rises, and Ectenia becomes a coffee exporter.c. Domestic production of coffee falls, and Ectenia becomes a coffee importer.d. Domestic production of coffee falls, and Ectenia becomes a coffee export

Answer 1

Answer:

c. Domestic production of coffee falls, and Ectenia becomes a coffee importer.

Explanation:

As with a change in economic situations related to an individual product, it impacts the nation trading worldwide of that product.

In the given instance the domestic price of coffee falls, and then with this it is obvious that demand tends to increase, also because of decrease in price the contribution of companies domestically tends to decrease, therefore, the companies might not further produce coffee.

And with the resulting demand the country would have to import coffee beans.

Therefore, the correct answer is:

c. Domestic production of coffee falls, and Ectenia becomes a coffee importer.