The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.?Figure 20.1??In the figure,?P₁: Price of the good in the international market.?P₂: Price of the good in the domestic market after the imposition of tariff by the government.?P₃: No-trade price of the good in the domestic market.

-According to Figure 20.1, if the international price of the good is P₁, which of the following statements is true?
A) The domestic market is in equilibrium.
B) There is an excess supply in the domestic market by the amount Q₄ - Q₂.
C) The country will export Q₃ - Q₁ units of the good.
D) There is an excess demand of Q₄ - Q₂ units in the domestic market.
E) The country needs to import Q₅ - Q₁ units of the good to satisfy domestic demand.
Correct Answer:
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