The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supp The world price is $20 per shirt.
-In the figure above, with international trade the United States million shirts per year.

Question

Quizplus · Accepted Answer

At the world price of $20 per shirt, the domestic quantity supplied (at point A) is 40 million shirts and the domestic quantity demanded (at point B) is 80 million shirts. This creates a domestic surplus of 40 million shirts (80 minus 40). With international trade, the United States will import the difference between domestic demand and domestic supply at the world price. Therefore, the United States will import 32 million shirts per year (80 - 40 - 8 = 32), which is shown by the vertical distance between point B and the quantity axis. Thus, the correct answer is D: imports 32.

The Figure Shows the Market for Shirts in the United