Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable to influence the South Korean (world) price. Assume the South Korean price to be $60 per calculator.
Figure 6.2. Effects of an Export Subsidy
-Consider Figure 6.2.With free trade, Mexican consumers purchase ______________ calculators, Mexican firms produce ______________ calculators, and ______________ calculators are imported.

Question

Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable to influence the South Korean (world) price. Assume the South Korean price to be $60 per calculator.
Figure 6.2. Effects of an Export Subsidy 
-Consider Figure 6.2.With free trade, Mexican consumers purchase ______________ calculators, Mexican firms produce ______________ calculators, and ______________ calculators are imported.

Quizplus · Accepted Answer

With free trade, the domestic price of calculators in Mexico is determined by the world price, which is $10 per calculator. At this price, Mexican consumers demand 10 million calculators and Mexican firms supply 6 million calculators. Therefore, Mexico imports 4 million calculators. (Option B matches this outcome).

Figure 62 Illustrates the Calculator Market for Mexico, Assumed to Be