The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is P W.Assume that all jeans are identical.
FIGURE 33-2
-Refer to Figure 33-2.In the presence of free international trade,Canadaʹs production will be at the quantity

Question

The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is P W.Assume that all jeans are identical.
  FIGURE 33-2
-Refer to Figure 33-2.In the presence of free international trade,Canadaʹs production will be at the quantity

Quizplus · Accepted Answer

In the presence of free international trade, Canada's production will be at the quantity Q1 because at this quantity, the domestic price of the good is equal to the world price, and there is no incentive for Canadian producers to either import or export the good.

The Diagram Below Shows the Domestic Demand and Supply Curves