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Nina [5.8K]
3 years ago
5

n autarky, suppose that equilibrium sugar price is $100 per ton in Birdonia, a small agricultural nation. Now, suppose Birdonia

engages in free trade with the rest of the world. The world price of sugar is $125 per ton.What will happen to the domestic price of sugar in Birdonia
Business
1 answer:
Rainbow [258]3 years ago
6 0

Answer:

the domestic price of sugar will increase to $125.

Explanation:

Since the world price of sugar is higher than the domestic price, domestic producers of sugar will export their products in order to earn a higher profit. That will eventually lead to an increase in the equilibrium price from $100 (former equilibrium price) to a higher price equal to the world price ($125).

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