The small country assumption is made in developing models of international trade because it applies to US markets. a) True
b) False

The small country assumption is made in developing models of international trade because it applies to US markets.

b) False

Explanation:

The small country assumption, which states that a country's imports are small compared to the world market's imports, such that when this country's imports are eliminated, no noticeable effect will be felt on the world demand for the product or the product's price, cannot be applied to the US markets.  For example, the US markets are so large in proportion to the world's market demand for a product like crude oil that when the US does not import its share of the quantities of crude oil, the price of crude falls, and the quantity supplied overruns quantity demanded, causing market disequilibrium.  This assumption cannot, therefore, be applied to the US markets.