True or False: When a country is too small to affect the world price, allowing free trade will have a non-negative effect on total surplus in that country, regardless of whether it imports or exports as a result of international trade. True False

Question

Eugene Diaz

Business

3 July, 23:15

True or False: When a country is too small to affect the world price, allowing free trade will have a non-negative effect on total surplus in that country, regardless of whether it imports or exports as a result of international trade. True False

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Answers (1)

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Jacquelyn Byrd · Answer 1

False

Explanation:

As when a country export or imports the items of values in an intentional trade it affects the price in the world market by the quality and the quantity of the services and the goods it produces and free trade does have a non-negative impact on the surplus stored of the country. As the factors of the production as labor and capital are mobile and even small country like Taiwan can contribute to impact on prices.