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.Which of the following statements is true?

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.Which of the following statements is true?

Quizplus · Accepted Answer

After the economy opens up to free trade, if the world price is lower than the domestic price without trade, the country will import the difference between the quantity demanded at the world price and the quantity supplied by domestic producers at that price. However, if the world price is higher than the domestic price, the country will export the difference between the quantity supplied at the world price and the quantity demanded at that price. In this scenario, the correct choice indicates that the country will export calculators, suggesting that the world price is higher than the domestic price, leading to an excess supply domestically that is then exported.

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