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The price of sugar that prevails in international markets is called the:

a. export price of sugar.
b. import price of sugar.
c. comparative-advantage price of sugar.
d. world price of sugar.

1 Answer

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Final answer:

The international market price of sugar is referred to as the D. world price of sugar, which is determined through the dynamics of supply and demand in global trade.

Step-by-step explanation:

The price of sugar that prevails in international markets is known as the world price of sugar. When international trade is allowed, as in the example between Brazil and the United States, the dynamics of supply and demand across borders come into play. Firms will buy sugar in Brazil, where it's cheaper, and sell it in the US at a higher price, affecting supplies and prices in both countries until equilibrium is reached.

This equilibrium price is set at a level where no further incentive for trade exists; for instance, if the equilibrium price of sugar is 16 cents per pound, Brazilian farmers will supply more sugar than is consumed locally, exporting the excess, whereas the US will import to meet its higher demand.

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