Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 9 - Part III - Application: International Trade - Questions for Review - Page 189: 1

Answer

The domestic price indicates a country's opportunity cost in producing a good. A high domestic price indicates that a country has a high opportunity cost of producing a good, meaning that it does not have a comparative advantage in its production. A low domestic price indicates a low opportunity cost, meaning that it has a comparative advantage in its production.

Work Step by Step

The domestic price provides an indication of a country's opportunity cost in producing a good. A high domestic price indicates that a country has a high opportunity cost of producing a good, meaning that it does not have a comparative advantage in its production. A low domestic price indicates a low opportunity cost, meaning that it has a comparative advantage in its production.
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