In the above example, the country B will receive a negative impact on its economy as it is a single resource economy depending on export of steel and steel products.
How is a country's economy impacted?
An impact on the economy of a company is impacted due to various changes that are made in its internal as well as external environment. Changes often relate to the change in quantity demanded of a particular product.
In the above example, we can see that country B is a single-resource economy dependent only on export of steel or steel products. Invention of new and cheaper metal than steel will lead to lowered demand of steel.
Development of a better, cheaper and durable metal is an external factor which is not in the hands of the country and hence a negative impact will be seen in its economy.
Hence, the option C; country B's economy will be negatively impacted as it is a single -resource economy dependent on production and export of steel and steel products.
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