ECO 1104 Chapter Notes - Chapter 9: Comparative Advantage, Takers, Unfair Competition
3363410481 and 38221 others unlocked
16
ECO 1104 Full Course Notes
Verified Note
16 documents
Document Summary
World price: the price of a good that prevails in the world market for that good. If world price is higher than domestic price, then the country will become an exporter. If world price is lower than domestic price, then the country will become an importer. This is the demand for a country"s goods on the world market: perfectly elastic because the country can sell as much of a good as it wants at the world price. This is also the supply of this good in the world"s market for the country: perfect elastic because the country can buy as much of a good as it wants at the world price. Small economy: price takers, because they have no effect on the world market. Exporters: if world price is higher than domestic price, domestic price will rise to meet world price. Domestic consumers are worse off because they have to pay the higher price.