Question

If the demand for a country's major merchandise imports is price inelastic, then use
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Answer 1

Explanation:

If the price for an inelastic good is lowered, the demand for that good does not increase, resulting in less overall revenue due to the lower price and no change in demand. This would indicate that the firm should not reduce the price of its goods as there is no beneficial outcome in doing so

Answer 2

Answer:

A deterioration (unfavourable movement) in the terms of trade may improve the trade balance. ... An improvement in the terms of trade will worsen the balance of payments if the demand for exports and imports is price elastic, and improve it if demand for exports and imports is price inelastic

Explanation:

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