$$\begin{array} { c c | c c }
\hline{ \text { Demand } } && { \text { Supply } } \
\hline \mathrm { Q } & \mathrm { P } & \mathrm { Q } & \mathrm { P } \
\hline 12,000 & \$ 0 & 6,000 & \$ 0 \
10,000 & 1 & 7,000 & 1 \
8,000 & 2 & 8,000 & 2 \
6,000 & 3 & 9,000 & 3 \
4,000 & 4 & 10,000 & 4 \
\hline
\end{array}$$
-Refer to the table in the exhibit, which illustrates the domestic supply and demand for tulips in The Netherlands.Suppose the world price of tulips is $1, and no trade restrictions are in place.What would happen in The Netherlands' tulip market?

Question

$$\begin{array} { c c | c c } 
\hline{ \text { Demand } } && { \text { Supply } } \
\hline \mathrm { Q } & \mathrm { P } & \mathrm { Q } & \mathrm { P } \
\hline 12,000 & \$ 0 & 6,000 & \$ 0 \
10,000 & 1 & 7,000 & 1 \
8,000 & 2 & 8,000 & 2 \
6,000 & 3 & 9,000 & 3 \
4,000 & 4 & 10,000 & 4 \
\hline
\end{array}$$
-Refer to the table in the exhibit, which illustrates the domestic supply and demand for tulips in The Netherlands.Suppose the world price of tulips is $1, and no trade restrictions are in place.What would happen in The Netherlands' tulip market?

Quizplus · Accepted Answer

Since the world price of tulips is 1 dollar and the domestic supply is equal to domestic demand at a price of 1 dollar, there is no incentive for producers to charge a higher price to domestic consumers or sell to foreign consumers. Therefore, the market will reach an equilibrium at a price of 1 dollar and a quantity of 8,000, which represents the quantity both produced and consumed domestically. There is no reason for the Netherlands to import or export tulips in this scenario, so all tulips produced by the Netherlands will be consumed domestically.

-Refer to the Table in the Exhibit, Which Illustrates the