The following graph shows the demand for and domestic supply of a good in a country.If the country decides to trade,then at a world price of $1.00 _____.

Question

Quizplus · Accepted Answer

At a world price of $1.00, the domestic supply is 30 units while the domestic demand is only 20 units, creating a surplus of 10 units. Therefore, the country will import 50 units to meet the demand. This can be seen as the quantity demanded (20 units) intersects with the world supply curve at a price of $1.00, indicating that 50 units will be supplied at that price.

The Following Graph Shows the Demand for and Domestic Supply