-The above figure shows the U.S.market for 1 carat diamonds.With free trade,the United States produces ________ diamonds and imports ________ diamonds.

Question

Quizplus · Accepted Answer

The correct answer is based on the intersection points of supply and demand curves with the world price line. The U.S. would produce diamonds up to the point where its supply curve intersects the world price, indicating domestic production. Beyond this point, up to the demand at the world price, the U.S. would import diamonds. The difference between the total demanded at the world price and the domestically produced amount gives the quantity of imports.

-The Above Figure Shows the U