The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.
$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Quantity } \
\text { Supplied } \
\text { (Domestic) }
\end{array} & \text { Price } & \begin{array} { c }
\text { Quantity } \
\text { Demanded } \
\text { (Domestic) }
\end{array} \
\hline 12 & \$ 5 & 2 \
\hline 10 & 4 & 4 \
\hline 7 & 3 & 7 \
\hline 4 & 2 & 11 \
\hline 1 & 1 & 16 \
\hline
\end{array}$$ If this nation were entirely closed to international trade, equilibrium price and quantity would be

Question

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.
$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { Supplied } \
\text { (Domestic) }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded } \
\text { (Domestic) }
\end{array} \
\hline 12 & \$ 5 & 2 \
\hline 10 & 4 & 4 \
\hline 7 & 3 & 7 \
\hline 4 & 2 & 11 \
\hline 1 & 1 & 16 \
\hline
\end{array}$$ If this nation were entirely closed to international trade, equilibrium price and quantity would be

Quizplus · Accepted Answer

If the nation is closed to international trade, then the equilibrium price and quantity will be determined by the intersection of the domestic supply and demand curves. From the table, we can see that at a price of $3, domestic quantity supplied is 7 units and domestic quantity demanded is also 7 units. Thus, the equilibrium price and quantity are $3 and 7 units respectively. Therefore, the correct answer is (D).

The Accompanying Table Gives Domestic Supply and Demand Schedules for a Product