The diagram below shows the domestic demand and supply curves in the market for newsprint in Paperland.
FIGURE 33- 5
-Refer to Figure 33- 5.If Paperland engages in international trade and the world price is PC,the amount of newsprint will be .

Question

The diagram below shows the domestic demand and supply curves in the market for newsprint in Paperland.
  FIGURE 33- 5
-Refer to Figure 33- 5.If Paperland engages in international trade and the world price is PC,the amount of newsprint will be .

Quizplus · Accepted Answer

When the world price is PC, the domestic price in Paperland is higher than the world price, so Paperland will import newsprint. The amount of newsprint imported is the difference between the domestic demand at the world price (Q4) and the domestic supply (Q2), which is equal to Q4-Q2.

The Diagram Below Shows the Domestic Demand and Supply Curves