The correct answer is option D: “all of the above.”

Autarky equilibrium is a state of self-sufficiency in which a country or economy does not engage in international trade. In such a state, the country relies solely on its domestic production and resources to meet its consumption needs. Let’s explore why option D is correct and why the other options are not accurate descriptions of autarky equilibrium.

Option D: All of the above

This option correctly states that in autarky equilibrium, all of the following conditions hold true:

a. Production equals consumption:

In autarky, a country produces exactly what it consumes. Since there is no international trade, all the goods and services consumed by the domestic population are produced within the country. This means that the quantity of goods produced matches the quantity consumed, resulting in production equaling consumption.

b. Exports equal imports:

In autarky, there is no trade with other countries, which means that a country neither exports nor imports goods or services. The balance of trade is zero because there are no trade transactions. Consequently, exports are equal to imports, which is essentially zero.

c. There is no trade:

Autarky, by definition, is a state of self-sufficiency where a country does not engage in international trade. In this state, the country relies solely on its domestic production and resources to satisfy its needs, and there are no trade transactions with foreign countries.

Now, let’s examine why the other options are not correct:

Option A:

Production equals consumption While this statement is indeed true in autarky equilibrium, it represents only one aspect of autarky. Autarky is a broader concept that encompasses not only production equaling consumption but also the absence of international trade (exports equaling imports) and the country’s self-sufficiency.

Therefore, option A is a partial description of autarky but does not capture its entirety.

Option B:

Exports equal imports This option incorrectly suggests that exports equal imports in autarky, which is not the case. In autarky, there are no exports or imports because the country is self-sufficient and does not engage in international trade. The balance of trade is zero because there are no trade transactions with foreign countries. Therefore, option B is not an accurate description of autarky.

Option C:

There is no trade Option C correctly states that there is no trade in autarky equilibrium. However, it is a partial description of autarky and does not capture the full picture. Autarky also involves production equaling consumption and the country’s self-sufficiency. So, while this option correctly identifies the absence of trade, it does not cover all aspects of autarky.

In conclusion, option D, “all of the above,” is the correct answer because it accurately describes the conditions that hold true in autarky equilibrium. Autarky is characterized by production equaling consumption, exports equaling imports (which is essentially zero in autarky), and the absence of international trade.

These conditions collectively define the state of self-sufficiency in which a country relies solely on its domestic resources to meet its consumption needs, without engaging in trade with foreign nations.