Use the following to answer questions :
Figure 3-1
-Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, the appearance of foreign suppliers willing to sell any quantity at a price slightly higher than equilibrium can be expected to cause:
A)P* and Q* to climb.
B)P* and Q* to fall.
C)P* to climb while Q* falls.
D)Q* to fall while P* holds steady.
E)none of the above.

Question

Use the following to answer questions :
Figure 3-1 
-Let P* and Q* represent market clearing price and quantity, respectively.Given the supply and demand curves drawn in Figure 3-1, the appearance of foreign suppliers willing to sell any quantity at a price slightly higher than equilibrium can be expected to cause:
A)P* and Q* to climb. 
B)P* and Q* to fall. 
C)P* to climb while Q* falls. 
D)Q* to fall while P* holds steady. 
E)none of the above.

Quizplus · Accepted Answer

The introduction of foreign suppliers willing to sell at a price slightly higher than the equilibrium will not affect the market clearing price (P*) and quantity (Q*) because transactions will continue to occur at the equilibrium price, where domestic supply meets domestic demand. The foreign suppliers' offer is above this equilibrium price, so it does not directly impact the existing market equilibrium.

Use the Following to Answer Questions