Question

Some time ago, the nation of Republica opened up its paper market to international trade. Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?A. The domestic demand curve for paper shifted to the right as a result of the policy change.B. The price of paper in Republica decreased as a result of the policy change.C. Republica began exporting paper as a result of the policy change.

Answer 1

Answer:

C. Republica began exporting paper as a result of the policy change.

Explanation:

The policy change would results in the exportation of paper and this is because the opportunity cost is much lower in production of paper in comparison to other countries, stating that supply > demand in domestic market.