ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:MicroEconomics (about winners and losers from free trade)
Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the
domestic price of a meeker is $33. Suppose that the world price for a meeker is $25. Assume that Meekertown is too small
to influence the world price for meekers once they enter the international market.
1. If Meekertown allows free trade, it will be
1. Export
2. Import
meeker.
1. Meekertownian consumers are worse off under free trade than they were before.
1. True
2. False
2. Meekertownian producers are better off under free trade than they were before.
1. True
2. False
3. True or False: When a country is too small to affect the world price, allowing for free trade will never increase total
surplus in that country, regardless of whether it imports or exports as a result of international trade.
1. True
2. False
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