Refer to the figure below to answer the following questions.

Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, international trade ________ consumer surplus in Canada by ________.
A)decreases; $2.88 billion
B)decreases; $1.92 billion
C)increases; $2.88 billion
D)increases; $4.8 billion
E)increases; $1.92 billion

Question

Refer to the figure below to answer the following questions.
  
Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, international trade ________ consumer surplus in Canada by ________.
A)decreases; $2.88 billion 
B)decreases; $1.92 billion 
C)increases; $2.88 billion 
D)increases; $4.8 billion 
E)increases; $1.92 billion

Quizplus · Accepted Answer

In Figure 7.2.2, international trade decreases consumer surplus in Canada by $2.88 billion. This is because the price of the good in Canada is higher than the world price, so Canadian consumers have to pay more for the good.

Refer to the Figure Below to Answer the Following Questions