Figure 8.2
Exporting,Importing and Autarky Equilibrium in the Small Village Bean Market
Panel (a) Panel (b) Panel (c)

-According to Figure 8.2,if we define LIP as the local import price,EP as the external market price,LEP as the local export price,and AP as the autarky price,and if trade with big city were possible,which panel describes a situation where buyers are importing beans from big city?

Question

Figure 8.2
Exporting,Importing and Autarky Equilibrium in the Small Village Bean Market
Panel (a) Panel (b) Panel (c)
 
-According to Figure 8.2,if we define LIP as the local import price,EP as the external market price,LEP as the local export price,and AP as the autarky price,and if trade with big city were possible,which panel describes a situation where buyers are importing beans from big city?

Quizplus · Accepted Answer

In panel b, the external market price (EP) is lower than the autarky price (AP), meaning that the local buyers can import beans from the big city at a lower price than they would have to pay in the local market. This is the scenario where buyers are importing beans from the big city. In panels a and c, the external market price is higher than the autarky price, and therefore local buyers would not import beans from the big city.

Figure 8.2 Exporting,Importing and Autarky Equilibrium in the Small Village Bean Market