Figure 9-6

-Refer to Figure 9-6.If this country chooses to trade,what would be the price of wagons in this country and how many would be sold domestically

Question

Figure 9-6
 
-Refer to Figure 9-6.If this country chooses to trade,what would be the price of wagons in this country and how many would be sold domestically

Quizplus · Accepted Answer

By opening up to trade, the country will start importing wagons from foreign producers at a lower price of $4. As a result, domestic producers will have to lower their price in order to remain competitive. The new domestic equilibrium price and quantity will be where the domestic supply curve intersects with the world price of $4. This happens at a price of $5 and a quantity of 90 wagons sold domestically. Therefore, the correct choice is C.

Figure 9-6 -Refer to Figure 9-6.If This Country Chooses to Trade,what Would