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Elasticity & Trade: How Demand Shapes Economic Gains for Nations

Chapter 9, Problem 10

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QUESTION:

Consider a country that imports a good from abroad. For each of following statements, say whether it is true or false. Explain your answer.

a. The greater the elasticity of demand, the greater the gains from trade

b. If demand is perfectly inelastic, there are no gains from trade

c. If demand is perfectly inelastic, consumersdo not benefit from trade

Questions & Answers

QUESTION:

Consider a country that imports a good from abroad. For each of following statements, say whether it is true or false. Explain your answer.

a. The greater the elasticity of demand, the greater the gains from trade

b. If demand is perfectly inelastic, there are no gains from trade

c. If demand is perfectly inelastic, consumersdo not benefit from trade

ANSWER:

Step 1 of 4

Gains from trade refer to the advantages derived from economic transactions, leading to benefits for both consumers and producers

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Elasticity & Trade: How Demand Shapes Economic Gains for Nations
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Explore how elasticity of demand impacts gains from trade in economies. Understand the relationship between demand elasticity and benefits for consumers and producers. Debunk misconceptions about inelastic demand and trade gains.


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