The table below shows hypothetical Canadian domestic demand and supply schedules for granite.Assume there are no restrictions on trade. TABLE 32-6 Refer to Table 32-6.Suppose the world price of granite is $350 per tonne.What quantity will Canada import or export?

Question

The table below shows hypothetical Canadian domestic demand and supply schedules for granite.Assume there are no restrictions on trade.  TABLE 32-6 Refer to Table 32-6.Suppose the world price of granite is $350 per tonne.What quantity will Canada import or export?

Quizplus · Accepted Answer

At the world price of $350, Canadian domestic demand is Qd = 240−10P = 240−10(350) = −1,160, indicating that Canadians are not willing to buy any granite. Canadian domestic supply is Qs = 10P−50 = 10(350)−50 = 3,450. Therefore, Canada will import the difference between domestic demand and supply, which is 1,160 − 0 = 1,160 tonnes. But the maximum that the world is willing to supply is 1,010 tonnes, so Canada will import 1,010 tonnes and the remaining 150 tonnes will stay in the Canadian market. Therefore, the answer is B.

The Table Below Shows Hypothetical Canadian Domestic Demand and Supply