Question

Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of a meeker is $30. Suppose that the world price for a meeker is $40. Assume that Meekertown is too small to influence the world price for meekers once they enter the international market. If Meekertown allows free trade, then it will_______meekers. Given current economic conditions in Meekertown, complete the following table by indicating whether each of the statements is true or false. True or False: When a country is too small to affect the world price, allowing for free trade will always increase total surplus in that country, regardless of whether it imports or exports as a result of international trade.

Answer 1

The answer to the first part of the question about the meeker economy- which contains a fill-in-the-blank is - Export. And another part is - True.

Taking into account the demand for meekers in the made-up Meeker town economy. In the absence of foreign trade, a meeker costs $30 domestically. assuming meeker costs $40 in the real world.

Given that Meeker town is too small to have an impact on the global price of Meekers once they are sold abroad. Meeker town will export meekers if it permits free trade.

The claim that regardless of whether a country imports or exports as a result of international commerce,

enabling free trade will always enhance the total surplus in that country when that country is too tiny to have an impact on global prices is True

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