Figure 17-1 In Figure 17-1, in the absence of trade, the domestic price of shoes would be P_n. If the United States moved from a no-trade situation to free trade, which of the following would happen?

Question

Quizplus · Accepted Answer

With free trade, the United States would be able to import shoes from other countries, which would increase the supply of shoes in the domestic market, thereby lowering the domestic price of shoes (to PS1U0B0nS1U0B1). As a result of this lower price, domestic consumption of shoes would rise.

Figure 17-1 in Figure 17-1, in the Absence