What commodity should export to gain from trade


Assume that a country produces and consumes two goods, cloth and machines, and is in equilibrium in autarky. It now finds that it can trade at international prices where (P cloth/P machines) on the world market is greater than (P cloth/P machines) in the domestic market. Should it trade? If so, what commodity should it export? Why? Will it gain from trade? How do you know?

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: What commodity should export to gain from trade
Reference No:- TGS042025

Expected delivery within 24 Hours