-The above figure shows the Australian market for 1 carat diamonds. With free trade, Australia produces ________ diamonds and imports ________ diamonds.

Question

Quizplus · Accepted Answer

With free trade, Australia will produce at its equilibrium where domestic supply equals domestic demand. The choice that matches this description is 100,000 produced domestically and the difference between domestic demand at the world price and domestic supply, which is 800,000, imported.

-The Above Figure Shows the Australian Market for 1 Carat