The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia. The world price of calculators is $40.

-Refer to the figure above.What is the domestic demand for calculators in Barylia once the economy opens up to free trade?

Question

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia. The world price of calculators is $40.
 
-Refer to the figure above.What is the domestic demand for calculators in Barylia once the economy opens up to free trade?

Quizplus · Accepted Answer

Once the economy opens up to free trade, the domestic price of calculators will converge towards the world price of $40. At this price, the quantity demanded domestically is 20 units, as seen by the intersection of the demand curve with the vertical line at $40. Therefore, the answer is A) 20 units.

The Following Figure Shows the Demand Curve, D, and the Supply