If a market is in exporting equilibrium,an increase in supply will:

Question

Quizplus · Accepted Answer

If a market is in exporting equilibrium, it means that the local price is equal to the international price, and the quantity of goods produced in the local market is equal to the quantity demanded in the international market. An increase in supply, therefore, would lead to an increase in local production. However, since the market is already exporting, any additional supply exceeding the local demand would be exported, leaving the local price unchanged. Therefore, the correct choice is A - increase local production but leave the local price unchanged.

If a Market Is in Exporting Equilibrium,an Increase in Supply