Answer
The effects of free trade can be determined by comparing the domestic price without international trade to the world price. A low domestic price means the country has a comparative advantage, and a high domestic price means it does not.
Work Step by Step
A low domestic price indicates that the country has a comparative advantage in producing the good and that the country will become an exporter. A high domestic price indicates that the rest of the world has a comparative advantage in producing the good and that the country will become an importer.
