Figure 9-1
The following diagram shows the domestic demand and domestic supply for a market.In addition,assume that the world price in this market is $40 per unit.
-Refer to Figure 9-1.With free trade,domestic production and domestic consumption,respectively,are

Question

Figure 9-1
The following diagram shows the domestic demand and domestic supply for a market.In addition,assume that the world price in this market is $40 per unit. 
-Refer to Figure 9-1.With free trade,domestic production and domestic consumption,respectively,are

Quizplus · Accepted Answer

With free trade, the domestic price will equal the world price of $40. At this price, domestic production will be 1,600 units (point A) and domestic consumption will be 800 units (point B). The difference between production and consumption (800 units) will be exported or supplied to the world market. Thus, the correct answer is option C, with domestic production and consumption being 1,600 and 800 units, respectively.

Figure 9-1 The Following Diagram Shows the Domestic Demand and Domestic Supply