Small Country Assumption

Q:

In problem set 2, question 4, the 5% figure they give us just lets us assume the market in country X doesn't affect the world price, right? Is there a generally accepted percentage range for assuming this?

A:

You're right, the 5% just gives justification for the small country assumption. In general, I don't know of a specific threshold for being considered a small country. On problem sets and exams, you will either be told that you can make the assumption, or you can explicitly write that you are making the small country assumption and state your reasoning.