trade and prices remain unchanged

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< Back Assignment details Business in the Globalised Economy (2210)
SECTION A
Answer each question and explain as per the instructions at the bottom of each question.
QUESTION A.1
If a country closes off to trade and prices remain unchanged, what does that mean?
A. Autarky prices and free trade prices are the same. B. Autarky prices are larger than free trade prices. C. Autarky prices are smaller than free trade prices.
D. The absolute value of autarky prices are negatively correlated with free trade prices.
(1 mark)
Explain your answer in up to 200 words and using a diagram
(4 marks)
QUESTION A.2
If a country closes off to trade and notices that the number of firms in an industry doubles in size, what economic theory would help us explain this phenomenon?
A. Stolper-Samuelson. B. Melitz. C. Ricardian.
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