Question

Rank the different economies from the type that normally generates the highest market prices for consumers down to the type that normally generates the lowest market prices for consumers.

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Correct Answer List
Highest price for consumers
open economy with quotas

1
open economy (free trade)

2
closed economy (no trade)

3
Lowest price for consumers

Answer 1

From the type that normally generates the highest market prices for consumers down to the type that normally generates the lowest market prices for consumers, the different economies can be ranked as follows:

Closed economy (no trade)

Open economy with quotas

Open economy (free trade)

In a closed economy with no trade, there is no competition from foreign producers, which can result in higher prices for consumers. In an open economy with quotas, trade is allowed but restricted by quotas, which can limit competition and result in higher prices for consumers compared to an open economy with free trade. In an open economy with free trade, there are no restrictions on trade and competition from foreign producers can help drive down prices for consumers

Step-by-step explanation: