A country will gain more from selling a good via trade when the world price is m

Question

A country will gain more from selling a good via trade when

the world price is much greater than the country's opportunity cost for the good.

the world price is close to the country's opportunity cost of the good.

trade is regulated.

the world price is below the country's opportunity cost of the good.

the world price is much greater than the country's opportunity cost for the good.

the world price is close to the country's opportunity cost of the good.

trade is regulated.

the world price is below the country's opportunity cost of the good.

Explanation / Answer

Introduction:-

When a country exports it wants to produce a good or a service that gives it highest possible revenues and profits that will help it in growing and collecting foreign revenue, thereby it would be helped by increasing the value of its currency.

Explaination:-

Any country would want to sell a product that has high international market value and can be produced at the minimum possible cost therefore maximising profits. Profits are calculated by deducting the value or cost of producing something with the revenue earned by selling the product or service.

Opportunity cost is the difference between producing the next best alternative. If the cost is low and the profits higher, the country can certainly produce more of the good.

Therefore, the answer to this question is option A) the world price is much greater than the country's opportunity cost for the good..

Further Explaination:-

When the world price is at par or lesser than the opportunity cost, other goods would be taken up by the government and the producer rather than the good itself so as to cash in on profits.

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