Figure 9-6

-Refer to Figure 9-6.If this country allows free trade in wagons,how much will consumers gain or lose

Question

Figure 9-6
 
-Refer to Figure 9-6.If this country allows free trade in wagons,how much will consumers gain or lose

Quizplus · Accepted Answer

The world price of wagons is $100, which is lower than the domestic price of $280. If the country allows free trade in wagons, consumers will gain by the difference between the world price and the domestic price, which is $180 per wagon. The total gain for consumers will be the area of the triangle formed by the world price, the domestic supply curve, and the quantity demanded at the world price, which is $240 ($180 x 4/3). Therefore, the correct answer is D) gain by $240.

Figure 9-6 -Refer to Figure 9-6.If This Country Allows Free Trade in Allows