If a country produces a commodity in the range of decreasing returns to scale, and the country begins to export more in a pure free trade system, the domestic price of the commodity will
a. fall.
b. rise.
c. exceed the price in foreign countries.
d. be below the price in foreign countries.
e. One cannot predict the impact on the price of the commodity.
b
You might also like to view...
One difference between stocks and bonds is that
A) stocks do not involve a promise to repay a purchaser of the stock, while bonds represent a promise to repay the purchase price of the bond. B) stocks represent ownership in companies, while bonds represent ownership in banks. C) stocks are financial securities, while bonds are labor market securities. D) stocks are usually issued in electronic form, while bonds are usually issued in paper form.
One major assumption of economics is that people
A) act as if they systematically pursue self-interest. B) behave randomly without any predictable pattern. C) are sometimes rational and sometimes irrational. D) always pursue the interests of others.