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If a Country's PX/PY in Autarky Is Less Than the PX/PY

Question 19

Multiple Choice

If a country's PX/PY in autarky is less than the PX/PY on the world market, then, as the Country moves from autarky to trade, the relative price of good Y will __________ for Home consumers. Thus, consumers with a strong relative preference for good __________ would tend to oppose the movement to trade.


A) increase; Y
B) increase; X
C) decrease; Y
D) decrease; X

Correct Answer:

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