Exhibit 17.2

-Refer to Exhibit 17.2, which shows the demand for and domestic supply of a good in a country. If the country decides to trade, then at a world price of $1.00, _____

Question

Exhibit 17.2
 
-Refer to Exhibit 17.2, which shows the demand for and domestic supply of a good in a country. If the country decides to trade, then at a world price of $1.00, _____

Quizplus · Accepted Answer

At a price of $1.00, the quantity demanded domestically is 40 units and the quantity supplied domestically is only 10 units. This means that the country has a shortage of 30 units, which will be filled through imports. The difference between the quantity demanded domestically and the total quantity supplied (which includes both domestic and imported goods) is 50 units, so the country will import this amount.

Exhibit 17.2 -Refer to Exhibit 17.2, Which Shows the Demand for and the Demand