Figure 9.5.2
-Refer to Figure 9.5.2 above. At free trade, domestic consumption is:
A) 5500; domestic production is 1000; imports are 4500.
B) 5000; domestic production is 2000; imports are 3000.
C) 4000; domestic production is 4000; imports are 0.
D) 2000; domestic production is 5000; imports are 3000.
E) 1000; domestic production is 5500; imports are 4500.

Question

Figure 9.5.2
-Refer to Figure 9.5.2 above. At free trade, domestic consumption is:
A) 5500; domestic production is 1000; imports are 4500. 
B) 5000; domestic production is 2000; imports are 3000. 
C) 4000; domestic production is 4000; imports are 0. 
D) 2000; domestic production is 5000; imports are 3000. 
E) 1000; domestic production is 5500; imports are 4500.

Quizplus · Accepted Answer

At free trade, domestic consumption includes both the domestically produced goods and the imported goods. The correct choice indicates that domestic consumption is at its highest (5500), domestic production is at its lowest (1000), and imports are necessary to meet the remaining demand (4500), which aligns with a typical scenario of free trade where domestic demand exceeds domestic supply, leading to high imports.

Figure 9.5.2 -Refer to Figure 9.5.2 Above. at Free Trade, Domestic Consumption