Refer to the information provided in Figure 33.3 below to answer the question(s) that follow. Figure 33.3
-Refer to Figure 33.3. The domestic price of shoes is $80. After trade the price of a pair of shoes is $60. After trade this country will import
A) 100 pairs of shoes.
B) 200 pairs of shoes.
C) 300 pairs of shoes.
D) 1,300 pairs of shoes.

Question

Refer to the information provided in Figure 33.3 below to answer the question(s) that follow.  Figure 33.3
-Refer to Figure 33.3. The domestic price of shoes is $80. After trade the price of a pair of shoes is $60. After trade this country will import
A) 100 pairs of shoes. 
B) 200 pairs of shoes. 
C) 300 pairs of shoes. 
D) 1,300 pairs of shoes.

Quizplus · Accepted Answer

The domestic price of shoes is above the world price (represented by the dashed line) which means this country has a comparative advantage in producing shoes. After trade, the domestic price will decrease to the world price, resulting in a lower price of $60. This will lead to an increase in demand for shoes from this country, and the country will import the difference between domestic demand (400 pairs) and domestic supply (100 pairs) at the world price, which is 300 pairs of shoes. Thus, the correct answer is C.

Refer to the Information Provided in Figure 33