The diagram below shows the (hypothetical)demand and supply curves for regional jets in Canada.Assume that the market is competitive,all jets are identical,and that Canada engages in international trade. FIGURE 32-6
-Refer to Figure 32-6.Assume the world price of a regional jet is $20 million.Further,suppose that Canada disallowed international trade in regional jets and Canadian consumers purchase the domestic equilibrium quantity of jets from domestic suppliers.What is the total additional expenditure Canadian consumers will pay in this no-trade situation versus the amount they would pay for the same quantity at the world price?

Question

The diagram below shows the (hypothetical)demand and supply curves for regional jets in Canada.Assume that the market is competitive,all jets are identical,and that Canada engages in international trade.  FIGURE 32-6
-Refer to Figure 32-6.Assume the world price of a regional jet is $20 million.Further,suppose that Canada disallowed international trade in regional jets and Canadian consumers purchase the domestic equilibrium quantity of jets from domestic suppliers.What is the total additional expenditure Canadian consumers will pay in this no-trade situation versus the amount they would pay for the same quantity at the world price?

Quizplus · Accepted Answer

The additional expenditure is the difference between the domestic price and the world price, multiplied by the quantity purchased. If the domestic price is higher than the world price, consumers pay more without trade.

The Diagram Below Shows the (Hypothetical)demand and Supply Curves for Regional