Application: International Trade•What determines whether a country imports or exports a good?•Who gains and who loses from free trade among countries?•What are the arguments that people use to advocate trade restrictions?
THE DETERMINANTS OF TRADE•The effects of free trade can be shown by comparing the price of a good without trade and the price of the good. •If a country has a comparative advantage, then – the domestic price will be below the world price, and the country will be an of the good.– Otherwise, the domestic price will be higher than the world price, and the country will be an .
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