The figure below depicts the steel market for Portugal, a small nation that is unable to affect the world price. Assume that Germany and France can supply steel to Portugal at a price of $200 and $300, respectively.

Figure 8.2. Portugal's Steel Market

-Consider Figure 8.2.With free trade, Portugal will import 25 tons of steel from Germany at a price of $200 per ton.

Question

The figure below depicts the steel market for Portugal, a small nation that is unable to affect the world price. Assume that Germany and France can supply steel to Portugal at a price of $200 and $300, respectively.

Figure 8.2. Portugal's Steel Market

-Consider Figure 8.2.With free trade, Portugal will import 25 tons of steel from Germany at a price of $200 per ton.

Quizplus · Accepted Answer

The diagram shows that at the world price of $200, Portugal's domestic supply of steel is 40 tons and domestic demand is 65 tons. Therefore, Portugal will import 25 tons of steel from Germany to meet its domestic demand.

The Figure Below Depicts the Steel Market for Portugal, a Small