If the price of good S in country A without trade is lower than in country B, what is the expected outcome once trade is permitted?

Choose the correct answer

Explanation

If country A has a lower autarky price for good S compared to country B, it means A can produce S more cheaply. Therefore, when trade opens, country A is expected to export good S to country B.

If the price of good S in country A without trade is… — Foundations Of Modern Trade Theory | PakQuizHub