If the world price of a good is equal to its no-trade equilibrium price, the country will import more of the good from other nations.

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Zechariah Rivers

3 October, 05:17

If the world price of a good is equal to its no-trade equilibrium price, the country will import more of the good from other nations.

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Answers (1)

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Itzel Fleming · Answer 1

False

Explanation:

The no-trade equilibrium price of a good refers to the domestic price of a good in an economy without any exports or imports. Therefore if the world price of a good is equal to the domestic price of the good, then there is no incentive to import the good.

Domestic producers will have an incentive for foreign trade if the world price is different from the domestic. If the world price is higher there is an incentive to export. If world price is lower, then there is an incentive to import.