Under what condition will a product be traded between two countries based on the price difference before trade?

Show Answers

When the price difference is smaller than the transportation cost between the countriesWhen the price difference exceeds the transportation cost between the countriesWhen the price difference matches the transportation cost between the countriesInsufficient information to determine the conditionWhen the price difference is unrelated to transportation costs

Explanation

A product will only be exchanged between countries if the price difference before trade is greater than the cost of shipping it between them. If the price difference is less than or equal to the transportation cost, trading would not be profitable.