Figure 5.6 Domestice Supply and demand for Wine - U.S.
-Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.How much will the U.S.produce and import in these circumstances?

Question

Figure 5.6 Domestice Supply and demand for Wine - U.S. 
-Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.How much will the U.S.produce and import in these circumstances?

Quizplus · Accepted Answer

At the price of $8 per bottle, the U.S. domestic supply curve intersects with the demand curve at a quantity of 5 bottles. This means that the U.S. will produce 5 bottles domestically. However, at the same price, the EU is willing to supply an additional 35 bottles, which means that the U.S. will import 35 bottles from the EU. Therefore, the total quantity of wine that the U.S. will produce and import is 5 bottles domestically and 35 bottles from the EU, for a total of 40 bottles.

Figure 56 Domestice Supply and Demand for Wine - U