Author Question: International trade theory implies that international trade is beneficial to all trading countries. ... (Read 107 times)

tichca · **on:** Jun 30, 2018

International trade theory implies that international trade is beneficial to all trading countries. However, casual observation leads to the conclusion that official obstruction of international trade flows is widespread.

How might you reconcile these two facts?

Question 2

If country A has a larger trade triangle than country B, reciprocal demand will lead to an increase in the relative price of A's imports.

Indicate whether the statement is true or false

elyse44 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

This question is meant to allow students to offer preliminary discussions of issues, which will be explored in depth later in the book.

Answer to Question 2

TRUE
Explanation: The terms of trade must turn in favor of B for equilibrium.