Author Question: Consider the trade of a product between two regions. If it is very inexpensive to move the product ... (Read 43 times)

danitzaidaly · **on:** Oct 12, 2022

Consider the trade of a product between two regions. If it is very inexpensive to move the product from one regional market to another, then the
◦ price it sells for in every country will depend on the cost of labour in the single low-cost country in which the product was produced.
◦ difference in the price from one market to another will depend on the relative elasticities of supply in the separate markets.
◦ "law of one price" argues that it will sell for approximately the same price in all markets.
◦ absolute cost of producing the product must be the same in all markets.
◦ production of the world supply will be from the single country with the lowest absolute cost of producing it.

koswald · **Reply #1 on:** Oct 12, 2022

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