(Figure: The Home Monopolist's Market) The graph shows a home monopolist market with free trade and with the imposition of a tariff. The world price is $250. With free trade, the home country will produce ________ and import ________.

Question

Quizplus · Accepted Answer

With free trade, the home country will produce where its domestic supply and the world price intersect, which is at point A in the graph. This corresponds to producing 75 units and importing the difference between that and the quantity demanded, which is 110 units. Therefore, the home country will import 110 units at the world price of $250.

(Figure: the Home Monopolist's Market) the Graph Shows a Home