Consider a country that imports a good from abroad. For each of following statements, state 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, consumers do not benefit from trade.”

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Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509
BuyFind

Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509

Solutions

Chapter 9, Problem 7PA
Textbook Problem

Consider a country that imports a good from abroad. For each of following statements, state 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, consumers do not benefit from trade.”

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